Reducing mortgage amount on bank letter of offer

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Every_blooming

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Hello,
Sister has gone sale agreed on a property. Bank has issued letter of loan offer for a mortgage equivalent to 90% LTV. She now wishes to commit a larger amount of savings to her house deposit to reduce mortgage to 80% LTV. Is it possible to just inform bank to issue a smaller mortgage amount for drawdown or will a new application have to be submitted. Apologies if this seems basic.
 
Slightly different opinion here - but it probably makes sense to be cautious if time is of the essence:

AIB: No penalty Early repayment within the 1st year?

Hi everyone, I’ve learned so much from this forum throughout my mortgage application process—thank you all! Drawdown a new build in 2 months. In my AIB mortgage offer, there’s a clause about early repayments. It says that if I repay early during a fixed term, they’ll compare the interest rate...
www.askaboutmoney.com
Why not just ask the lender? That would seem like the simplest approach?
What's the benefit of changing from 90% to 80% LTV now? A lower (fixed?) rate or something?
 
She previously earmarked the savings for a small extension, architect recommended plan to use existing space better thus saving money. The lower interest rate was another incentive. She's on a fixed rate mortgage so paying off 10% of principle in 1st year will most likely incur a penalty as she's allowed make a maximum of extra 10% overpayment
 
Every_blooming said:
She previously earmarked the savings for a small extension, architect recommended plan to use existing space better thus saving money. The lower interest rate was another incentive. She's on a fixed rate mortgage so paying off 10% of principle in 1st year will most likely incur a penalty as she's allowed make a maximum of extra 10% overpayment
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Then she should go back to the lender and ask them if they can just reduce the amount borrowed from 90% to 80% LTV without much,if any, delay or having to do a completely new loan application etc.
 
Are borrowers obliged to drawdown the amount in the Loan Offer?

Or is that amount a maximum, and the borrower can drawdown less?
 
This must happen all the time where people draw down more or less than planned.

I presume that the lenders can turn around the revised offer in a matter of days.

If the LTV is lower and the rate is correspondingly lower, they would presumably have to issue a new offer.
 
Brendan Burgess said:
I presume that the lenders can turn around the revised offer in a matter of days.
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I'm a tad more cynical re lenders; I've yet to see any of them do things quickly.

I've had push back in the past because insurance docs had insured property as

25 AnyRoad, Anytown, Co Apples A97 XY4

Instead of

25 AnyRoad, AnyAvenue, Anytown, Co Apples, A97 XY4

The eircode correctly identified the exact property, so it was nonsense, but still delayed everything by another 10 days.

Personally I wouldn't faff about at this point; buy the house & make overpayments as soon as you can.

Once you are at or below the 80% mark you can request new interest rate.
 
DannyBoyD said:
I'm a tad more cynical re lenders; I've yet to see any of them do things quickly.
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DannyBoyD said:
Once you are at or below the 80% mark you can request new interest rate.
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You would probably need a new valuation even if it is only a few weeks later.

Simpler to sort it out now.

It probably should be done the day before you are going to close, but if you have a few days, then ask for a new loan offer. The OP has just gone sale agreed, so has plenty of time.

Mortgage protection cover would be cheaper as well.
 
This should really be quick enough with your lender to reduce the loan offer, often small changes like that just mean a new loan offer is issued directly to solicitor when the funds are released for drawdown. Similar happens when say a fixed rate has changed and the the one on drawdown is different to the one on original loan offer, new loan offer goes out with drawdown docs.
 
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