Mortgage company valued house lower

[whatsthatwordagainfeet]

We got our application for mortgage officially approved, however they have valued the house we are buying at 10k less than our offer. It doesn’t affect us getting our mortgage luckily. I was just surprised as it seemed very reasonably priced for the house and location! I can’t really understand why it was valued so low.

Has anyone else been in this situation?

What percentage is that? £10k be 10% or 0.000001% of the asking price.

But it's not an exact science and valuers work for the mortgage company so they will be on the risk adverse side of things, and happy to bump your LTV up.

I think it's definitely reasonable to take £10k off the asking price.
Otherwise you're starting off in negative equity and you can't really argue with a bank valuation.

Yes supposedly it happened to my buyers with their mortgage. They negotiated to reduce their offer by the amount. After a lot of negotiation we split the difference.

Technically, they may NOT be in negative equity - just less equity than they had on paper.

As the other poster said, whether 10K is relevant or not depends on the purchase price.

You absolutely can argue with a bank valuation! They are probably less reliable than estate agents a lot of the time because they usually won't even have seen the house and are just going buy generic historic data in the area.

This happened to us last week. The bank valued it 35k lower than asking price. Even though houses next door sold for more than their valuation and our house was better.
The mortgage advisor said it had happened to three of his clients this week. Banks are being very cautious because of the upcoming budget and bank of England meeting.

Thanks for the replies

Was genuinely very surprised at the valuation, it seems a good price and lots of similar houses in the area are selling well on Rightmove. We were really pleased with the price we got! We’ve looked at lots of properties so had a good idea of what was overvalued or a good price.

Interesting! What have you chosen to do?

@whatsthatwordagainfeet we negotiated with the seller to drop the price but only slightly. No where near 35k! Luckily we have quite a big deposit so no chance of us going into negative equity. We just needed to get into the next LTV band for the better mortgage rate. I think we are still over paying what it's worth a little bit but we love the house and really need to move asap so didn't want to risk losing the purchase.

Are they? The bank base rate is likely to go down. Swaps have fallen

It doesn't mean they have negative equity. Unless they have 100% mortgage which is unlikely.

@Terrifiedofthedentist nope, mortgage rates by my lender went up since we secured our rate a couple of weeks ago.

Yeah some lenders put their rates up swaps were on the up, but they’ve started to trend back down, the market is pretty sure on a rate cut to be announced in Novembers mpc meeting

Exactly. Negative equity is a big deal for banks, because they want to make a return on equity for their shareholders so if there is a risk of negative equity they won’t lend on that property.

you also can challenge a mortgage valuation by providing your own