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What is "value" in LTV

  • 07-11-2022 1:11pm
    Registered Users Posts: 483 ✭✭

    Is it the value attributed by the valuer, or the purchase price?

    I know more often that not it's one & the same as the valuers often stick down the cost as the value.

    I've gone sale agreed at 306, got a good enough deal, identical house across the road went for 340 in July.

    Now maybe that one was overvalued, maybe mine is undervalued, or not, but lo & behold, valuer put my value down at 306.

    My AIP is 220k, at 306k the LTV is 71.9%, which attracts a higher interest rate than <70%.

    Who knows, maybe they did me a favour & the real value is €290k, after all , who can tell at any point in time.


  • Registered Users Posts: 1,967 ✭✭✭HerrKuehn

    It would be the expected sales price at a point in time. Obviously it is not objective or very accurate. The valuer will just look at what "similar" (whatever that means in an illiquid market) houses are selling for.

  • Registered Users Posts: 2,595 ✭✭✭Buddy Bubs

    When starting out on a mortgage, its the purchase price. Loan is purchase price less deposit. You could manipulate your LTV by paying a higher deposit and borrowing less to get the better interest rate. You don't have to borrow the full 220k if you can find extra deposit.

    In this case you would have to put in deposit of 30% of 306k which is 91,800 and borrow 204,200 to get the better interest rate. Thats if you have it of course.

    However, depending on lenders rules and type of mortgage, you might be able to overpay in 6 months time or a year or whatever and bring the LTV down below 70% or even get a new valuation done at the time if you cant afford it now. But being so close to 70% already simply paying your mortgage for a while will bring this below 70% unless there is a crash in prices, which is an unknown at the moment, despite some people saying they are 100% sure prices will continue to rise or they will come tumbling down.

    Identical house across the road doesn't exist btw, being across the road means the aspect is different for the sun for a start. Or it might have a little less traffic on that part of the road, or nearer a laneway for quick access etc....there is always something different that somebody might pay for.

  • Registered Users Posts: 402 ✭✭Kurooi

    The value is 306 in your case. It's the value of the property with all the fixtures , excluding anything identified as contents (furniture)

    If the valuer said the house was worth 340, the value would still be 306. If they said 300, you'd have to likely negotiate down that 6k or pay it as cash and value is 300 as far as the bank is concerned. So to say the bank always takes the prudent view. Lower of valuation and purchase price.

    As for your 70% idea , you can ask the bank if you can draw down 214k instead of 220 (and pay the extra as deposit yourself) sure they won't mind it just has to be flagged as early as possible. Of course it assumes you have the 6k extra (70% of 306 would be 214k , vs 220 at 72%) in the bank on top of your deposit, legal fees, stamp duty, to pay that difference. Or after the mortgage is through get a real estate agent in they will value it over 306 and therefore under 70% LTV. Or just bulk pay the 6k as a lump and call them to chat rates. Though you may have better offers if you're a new customer, check the rates available now rather than later.

    The bank valuations often stick close to the purchase price, it's not in the interest of the bank to cause issues over petty change. So long as you didn't bid wildly above their expectations the valuation is a formality.