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undervaluing property

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  • undervaluing property

    Hello everyone, and this is my first post,

    I am in the process of buying a buy to let property, and have been agreed a 80% form a morgage lender, but after valuation the property was downvalued from £160 to £155, the value also stated that because the property is adjacent to a petrol station and resale might be a problem they are going to restrict the loan to 75% now.

    Can they restrict the loan to 75% on this basis, when a similar flat in the same building was valued at £160 just 4 days after the valuation was done on the property l want to buy. Also the same lender according to the agent provided morgage to a similar flat in the same block about 2 years ago.

    Pls advise

  • #2
    Re: undervaluing property

    Hi there,

    The short answer is - yes they can restrict the lending based on the valuer's comments.

    The valuer is sent to the property to report back to the lender on many things that might affect the lender's willingness to provide a loan and they will take his comments into account when making their decision.

    The underwriters will generally rely on the surveyor and will very rarely over-rule or ignore his advice.

    Until a mortgage offer is provided to you nothing is guaranteed or legally binding and before then the lender can decide to change their proposal to you or even refuse to lend altogether if relevant facts are revealed during the course of processing your application.

    The fact that another flat was valued at £160,000 is not necessarily relevant as there may be differences between the two properties, and even if there are not a valuation is only an opinion, not an exact science, and there's no way of knowing if the £160,000 valuation was too high or if the £155,000 valuation was too low. To challenge the decision you would generally need to provide details of at least three directly comparible properties that have sold within the last 6 months.

    The fact that the lender provided a mortgage on a flat in the same block 2 years ago is also largely irrelevant as they are not obliged to agree to do the same thing now and their lending criteria is likely to have changed in the meantime.

    In situations like this the lender is in command of the outcome and there's very little you can do to influence their decision as they are generally risk averse and cautious in all respects at the current time.
    Property for sale in Torquay



    • #3
      Re: undervaluing property

      Unfortunately it's their train set!
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