Maximum LTV Ratio Negotiation

Nextsteps

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Hi,

We are currently looking at mortgage options for a negative equity trade up mortgage. We've been approved in principle for c. 600k, have good savings for a deposit but a maximum LTV ratio of 85% means quite an additional deposit requirement versus a 90% LTV (+30k).

I was wondering if anyone has had any success in negotiating with any of the banks on the maximum LTV ratio's applied, assuming you can demonstrate ability to repay?

Thanks in advance!
 
You've been approved a loan of 600K for a purchase of how much? Part of the 600K is made up of your current NE. You want to have a 10% deposit but the bank will only allow you 15% (which seems reasonable and prudent given that you're buying while carrying over a mortgage). 600K is a lot of money, can you afford it, have you been stress tested, are your jobs secure.
 
We are at the very early stages of looking at options/feasibility - no purchase value at this point but unlikely to go higher than 600k purchase price, therefore only potentially looking to draw down 540 (in a 90% LTV scenario), or 510 (in a 85% LTV scenario). We would also be carrying approx 40k of NE. We have been stress tested and our jobs are secure.
 
If you are purchasing at 600 Euro

10% is 60K
15 % is 90K

How much have you saved, you mentioned a figure of 30K earlier?

Does borrowing 540 include the 40 K NE or would you then owe 580 on a property purchase price of 600K
Does borrowing 510 include the 40 K NE or would you then owe 550 on a property purchase price of 600K

What stress test were you put to?

Why do you have to move?
 
We have saved 60k. Our combined gross income is 170k per annum. The borrowing scenario in my reply above does not include the NE, so we would owe either 580 or 550 as you mention.


In the NE trade up, the bank apply their LTV criteria against the funding of the property to be purchased. They have broader LTV limits in these scenario for the whole borrowing amount (e.g. cannot be over over 175% LTV).


By my calcs, (assuming €600 for new property and €40k NE):
- if we were to borrow 85% LTV on the new property, our overall LTV would be 92%;
- if we were to borrow 90% LTV on the new property, our overall LTV would be 97%.


Reason for move is primarily a combination of work related and space related.
 
You can only ask but the banks tend to be strict about this. They can only say no though!
 
Nextsteps for info I just went through a similar exercise with the banks.

There requirement was to fund 10% of purchase price of new house.

Total LTV then worked out at about 97% when neg equity considered.

Be careful though to make sure you include all costs - stamp duty, legal , survey etc has to be done and come from savings. This will easily hit double figures. Legal alone cost 7k - partly as there were so many mortgages at play - I now have 3 due to keeping tracker. The sale and purchase was not smooth dealing with a bear incompetent solicitor on the sale who nearly brought the sale down and an equally incompetent bank on the purchase - all In my solicitor charged more than anticipated but couldn't blame him based on time alone.

Be prepared for a difficult few months - the banks say they know how to handle neg equity movers but in reality they don't.

This meant the sale and purchased could not complete simultaneously even though that us what they want to happen - this meant more mover and storage costs - and lodging if you have no family

Also I was pre approved for a much bigger 25% mortgage than they finally approved - after I found a property.
 
Sunny - thanks for the straightforward reply - you're not wrong!

peno - thanks for sharing your experience - useful to be prepared for a long few months if we decide to make the move. Was the 10% requirement standard for your lender or did you manage to negotiate to this point?
 
No the 10% was the standard we began the process with.
We did go back and forth on the final house price but the deposit was to be 10% of that number and it moved in line with various prices we were working to.
Even though it was possible they never requested a higher percentage.
 
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