Help me understand and what are our options

[mumdone]

So we’re part or a chain and was under the impression all was going well and we were close to exchange. It turns out our buyers do not have their mortgage offer. The valuation was done months ago and we were told that they had their offer by our estate agent. Searches done and queries answered so everything else in check. Anyhow they are now not able to get the LTV they need and need to increase their deposit by 5%. If they are not able to do this what options do we have? Thanks

You either come down in price or you get a new buyer

What WBWife said. If you drop your price you could always try to decrease your offer to whoever you are buying from, although of course they might drop you and look for a new buyer themselves.

And this is why moving house is one of the most stressful things you can do.

How does that work though? The LTV is still that, their LTV. If we were to reduce our price they still can only borrow a %? Sorry it probably is really simple but I just can’t get my head around it.

Because your price drop would give them a larger deposit. Thus making up to the LTV

Example

You accepted 200k

They have 20k deposit they need 180k mortgage

Bank will only lend upto 170k mortgage.

You'd need to drop 10k off the price to 190k so that they can use their 20k deposit and have a 170k mortgage

Ah yes!! I see. I think.

You can ask up the chain for others to reduce their price too, so each take a £3k hit on selling price to keep the chain intact.

If it was a pp of 200k and they had a 10% deposit that would be a mortgage of 180k and a LTV or 90%.
If they could only get an 85% LTV which equates to 170k.
If we dropped the price to 190k and the LTV is 85% then wouldn’t that mean 161,500k mortgage.
Sorry I’m still struggling 😬

Yes we will defo be doing that, as 3k wouldn’t eve scratch the surface 😢

It does really depend on whether it's a ltv problem or an amount borrowed problem. As you said OP, just dropping the value by £10k might not alleviate the problem. I think you need to find out what exactly us the problem. I would imagine they can only borrow a certain amount after all the affordability checks were done. They might have got a decision in principle to borrow £180k but after their application had been fully underwritten they are only able to borrow £170k . Again, this might not be a problem if you dropped £10k as their lender may be able to lend them 90%, but if the maximum they will lend is 85% then there is not a lot you can do. Your buyers need to be calling in favours & increasing their deposit asap.

I don't think it would be an LTV issue. It would be an amount issue.

Theyll say we will lend you upto whatever number they believe you can borrow.

LTV just determines the interest rate at which the mortgage is charged really.

Sorry OP, I should have added that some lenders will only lend up to certain ltv limits for certain amounts.

Eg. Lender may lend 90% up to £250k but only 85% between £250 & £400k. I know Bank of Ireland do this.

We’ve been told it’s a LTV issue.

but who knows 🤷🏼‍♀️.