Property valued less than offer

[JessicaHarper]

Hello,

My brother and I have made an offer and was accepted on a flat in Londons Canary Wharf.
The offer was at 430,000.
The mortgage valuation came back with 420,000 and the bank will only lend 75% of the value.

Now I think that this sort of thing must happen all the time as there is no scientifically "right" price for any given property and prices are subject to fluctuation all the time for various reasons. So it can't be that me and my brother are in an unusual situation. Even before the survey the bank said that these surveys were "a guide only" but now they are relying on the valuation.

Question I have is, has anyone faced this kind of situation, and how have you dealt with it?

I think you need to request that the price is adjusted accordingly. However if they refuse to budge on price, you need to find the extra money if you really want the property.

Is it a new build? This happened to us and apparently it is relatively common with a new build with particular lenders. In that scenario, we had to apply for a mortgage with a bank who we knew did not downvalue new builds.

Hi - it's not a new build, though was built four years ago.

Yes it's not unusual. If the bank will only lend 75% of 420 then you need to fund the extra yourself

Is it a 2 bed flat. I know some lenders are very cautious of flats. Might be worth researching to see whether your lender does this a lot.

Yes, it is a 2 bedroom flat. The bedrooms are quite big and bigger than similar flats which sold for the same price. I suspect the surveyor did not have a proper look even though they went to the flat.

We will re-negotiate with the seller.

It's very common.

I think the lenders do it so they can either give themselves a bit more margin, or make more profit out of selling you an insurance policy (which is of no benefit to you but out of which they make an enormous commission)