What will bank give for mortgage?

gouche

If this is wrong forum please move mods.

My question is when applying for a mortgage, is the amount borrowed based on the value of the property, or the selling price, or somewhere in the middle?
For instance, if I'm offered a house for €150,000 but it's valued by estate agent/auctioneer at €180,000, what would the bank give me?

Completely hypothetical situation by the way and apologies if it doesn't make any sense.

dev100

gouche wrote: »

If this is wrong forum please move mods.

My question is when applying for a mortgage, is the amount borrowed based on the value of the property, or the selling price, or somewhere in the middle?
For instance, if I'm offered a house for €150,000 but it's valued by estate agent/auctioneer at €180,000, what would the bank give me?

Completely hypothetical situation by the way and apologies if it doesn't make any sense.

All depends on what you earn to get a mortgage

chris85

gouche wrote: »

If this is wrong forum please move mods.

My question is when applying for a mortgage, is the amount borrowed based on the value of the property, or the selling price, or somewhere in the middle?
For instance, if I'm offered a house for €150,000 but it's valued by estate agent/auctioneer at €180,000, what would the bank give me?

Completely hypothetical situation by the way and apologies if it doesn't make any sense.

Max you can get depends on the loan to value (LTV) ratio and determined by appraised value of property. The highest LTV ratio you can get at the moment is 92% so on a house valued at €200k max you could get would be €184k.

Then actually getting this amount depends on your income and all that.

cookie1977

Lets say you did qualify for the mortgage. All they'd give you is a % of the price you pay. No one does 100% mortgages anymore. So lets say you had to pay 150,000 for the house but the bank will only give you 90% of the price, then they'll give you 135,000 and you'll have to fund the 15,000. They will not give you more money then the price you're paying even if you found a bank to give you a 100% mortgage

gouche

cookie1977 wrote: »

Lets say you did qualify for the mortgage. All they'd give you is a % of the price you pay. No one does 100% mortgages anymore. So lets say you had to pay 150,000 for the house but the bank will only give you 90% of the price, then they'll give you 135,000 and you'll have to fund the 15,000. They will not give you more money then the price you're paying even if you found a bank to give you a 100% mortgage

This is what I wanted to know. So the bank bases the amount borrowed on the selling price of the property rather than the actual valuation of it.

cookie1977

gouche wrote: »

This is what I wanted to know. So the bank bases the amount borrowed on the selling price of the property rather than the actual valuation of it.

So again speaking hypothetically and the bank feel like the price you're paying is a fair valuation then yes they will only give you the value of the house up to a % (90-92 or maybe less depending on the bank). BUT if they feel the price is very good and your income is strong they may give you more money to do up the house but they will certainly not just let you value a house at 180,000 and then give you 90% of that.
Make sense?

gouche

cookie1977 wrote: »

So again speaking hypothetically and the bank feel like the price you're paying is a fair valuation then yes they will only give you the value of the house up to a % (90-92 or maybe less depending on the bank). BUT if they feel the price is very good and your income is strong they may give you more money to do up the house but they will certainly not just let you value a house at 180,000 and then give you 90% of that.
Make sense?

Yep, cheers!

pjmn

gouche wrote: »

This is what I wanted to know. So the bank bases the amount borrowed on the selling price of the property rather than the actual valuation of it.

... no incorrect. The bank will base their loan on the lower of the actual purchase price or formal valuation - thereafter income levels will be taken in to account.

Supercell

They will base it on the lower of the valuation or what you applied for (at approval in principle)

So for example you want to apply for a mortgage of 250k and have 50 k saved.
The house is currently on sale at 350
Assuming you earn enough to be approved for the 250k you applied for, then your application may be successful.

If however you apply for a loan of 250k (so you can do up the gaff) on a house on sale for a house valued at 200k then they may only lend you the 200k.

Thats how it worked when I applied. I asked about loans for "doing up" the house and they said forget about it, that in the past it was possible but not now. So if you are a FTB looking for a doer upper, you better have a big deposit saved.

And as pjmn says below at draw down stage

pjmn wrote: »

The bank will base their loan on the lower of the actual purchase price or formal valuation - thereafter income levels will be taken in to account.