Mortgage Offer

We recently went through a broker for mortgage approval. We have €40K deposit and needeed a mortgage for €434K. Broker said the bank agreed in principle conditional of documents etc.

We saw a house we liked went to €470K and had the offer accepted.

Our motgage offer letter came in the door the other day and it is only for €420K )€13K short. The bank valued the house at €450K and will only give us 92% of that.

We cannot get the extra €13K. What do we do from here? Do we ask the bank for more or go back to the broker?

Neither. Go back to the seller and say your 13k short. In current climate you have a good chance of getting it.

A bank will not lend more than the valuation on the house as a rule. If you want to go through with the purchase, you will have to find another way to come up with the 13k other than the bank – neither the broker nor the bank could help you out on this one.

Warning bells should be sounding with you though! Maybe this is a blessing in disguise. The bank says the house you want to buy is overpriced by 13 grand. You can use this as a bargaining tool with the vendor to negotiate the price down. My guess is, if they sense you will have to walk away, they will not want to lose the sale in the current market for 13k.

Yes, sounds like you need to go back the the vendor. Difficult to judge how they will react, depends on how long they have been trying to sell etc - they may reduce the price, or they may feel they are being gazundered so you might need to show them some proof.

Were there any other offers/bidders on the property? How much below the initial asking price did you go sale agreed at?

Take the offer letter to another bank & see if they will give you an extra 13K.

Take the letter from the bank to the seller and tell them that's the best you can do, shrug your shoulders and wait a few weeks.
If you really want it do a bit of work behind the scenes and get the extra 13k, chances are though you wont need it.

LadyJane said:

Warning bells should be sounding with you though! Maybe this is a blessing in disguise. The bank says the house you want to buy is overpriced by 13 grand. You can use this as a bargaining tool with the vendor to negotiate the price down. My guess is, if they sense you will have to walk away, they will not want to lose the sale in the current market for 13k.

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The bank is saying house is overvalued by 20K not 13K, (470 -450)

Maybe you should offer them 450K, don't tell them you are 13K short.

tell the vendor you are pulling out, you can't finance the purchase

Thanks guys

The initial asking price was €550K, subsequently reduced to €495K and we sale agreed on €470K.

We cant finance the extra 13K we are maxed. My worry is that if the bank are valuing it less that the sale price, arent you technically getting into negative equity the minute you sign?

Negative equity is when the amount outstanding on yr mortgage is more than the value of your house.

What is your income? What time period is your mortgage over?

To be honest it sounds like you can't afford at the current selling price. Why max out? Wait, let things drop further and then go back in 2 years or so.

I'd certainly be reluctant to pay €470,000 for something that has a current valuation of €450,000. Be straight with the vendor - tell them that the valuation is €450,000 and you don't want to pay more than the house is worth.

Chopper1971 said:

Take the offer letter to another bank & see if they will give you an extra 13K.

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You must be joking or taking the p***!

OP, let's simplify this matter. The Bank will not lend more than the value which has been placed on the property by their experts. So do your figures and reduce your offer or better still go off and find a better house at a better price without having to 'Max' yourselves into Misery. You owe nobody nothing at this point in time.