Property valuation by the Bank

[thatdude]

I wanted some insight from people here who are more experianced and knowledgeable than I am.

I've made an offer on a flat, which was accepted for price X. The bank were happy and the mortgage application has been all fine

The bank has since carried out their evaluation on the value of the property, which they value 3% cheaper than the price.

For this reason they want the extra money as a bigger deposit (not possible!) or to loan more money at a higher interest rate (pushing up monthly repayments).

I am confused - why are they doing this i.e. under what reasons are they doing this? The price has been agreed and based on that agreed price a morgage was sorted out based on borrowing Z amount over so many years with such and such deposit made. And now, despite having to pay the same amount, the bank has decided that actually they want to charge me and my wife more

I'm confused, and a little upset.

So elighten me and tell me how usual this is and what work-arounds there are.

[edit] should I chalk this up to experience and the importance of getting a valuation done BEFORE i make an offer? Have I made an error here myself?

Edited by thatdude on Monday 18th August 15:45

[thatdude]

The bank we're going with is one we've held savings with for a long time, as have my wife's family. They sort of know us so we trust them.

I dont think its too late to walk away, although we have paid some non-refunable fees. I'm going to have a chat with my father-in-law this evening and also look at what savings I have - it might be yet another opportunity to wave byebye to the money I had saved (for the third time) for a Yamaha FZ1S motorcycle.

Thanks for the replies, the loan-to-value thing puts it into perspective...I suppose essentially the bank "owns" the property until we pay it off.

Still, I cant help feeling a little robbed and would like to know how they arrived at their result.

[thatdude]

So a couple of you wondered if the vendor will budge...well, no he wont! He already dropped 1k on his desired price for us, so I understand he wont go down (and to be fair, neither would I).

It's something to bear in mind for the future - how much will the property be worth and are we loosing money on it? Perhaps everyone looses money

oh, and mods - apologies for putting the thread in the wrong section. I wasnt sure.

[thatdude]

Thanks for all the replies. A resolution has been reached (my wife has been leant money from her father - a 0% interest loan he says!) and in the long run it actually works out better, as the morgage is less so less monthly repayments to them (at least for the first 2 years).

Certainly a lesson learned - the vendor wasnt going to budge, but the property really is very nice - especially compared to other properties of a similar asking price. If we wanted somewhere as nice but cheaper, it would mean moving quite far.