Mortgage deposit

[H18BYM]

Hi all,

Quick question on mortgage deposits these days. Can anyone advise how desposits work? If I was buying a house for say £250k, but it was valued at £275k, would I have to pay a cash deposit of the purchase price, or is the deposit taken care of by the lower purchase price?

Thanks

[easty]

Hi all,

Quick question on mortgage deposits these days. Can anyone advise how desposits work? If I was buying a house for say £250k, but it was valued at £275k, would I have to pay a cash deposit of the purchase price, or is the deposit taken care of by the lower purchase price?

Thanks

As far I'm aware the deposit would be based on the size of the mortgage you are taking.

[SlickShoes]

As far I'm aware the deposit would be based on the size of the mortgage you are taking.

Thats right, i am currently looking to buy my second place and i have a 10% deposit so on a house worth 100k i can borrow 90k.

Not many lenders will lend based on the valuation, they will lend on there own evaluation or what you end up paying for it, no one is lending more than they need to now.

[Holmesdale Hibs]

The valuation is basically the banks arse-covering so that if you default they know they can get their money back. Unfortunately you normally have to pay for it although some mortgages will offer a free valuation (which normally means the arrangement free is bigger so you pay anyway.)

It you agreed 250k buying price and the valuation is 275k then that just tells the bank they won't lose out. Your mortgage will be for 250k minus your deposit. i.e. with a 10% deposit, you pay 25k up front and your mortgage is for 225k.

Hope this helps

[H18BYM]

Thanks for your replies everyone, much appreciated. :thumbsup:

[Future17]

Just to add to this, most lenders will base their lending on either valuation or purchase price, whichever figure is lower.

So if a property is valued at £125k, but you are getting it for £100k, a £10k deposit would be required to secure a 90% mortgage.

Frequently what used to happen would be that, if you told the surveyor you were buying for £125k, properties that were worth slightly less would still be valued at £125k.