I am looking to purchase a property and looking for a small mortgage.

However.................the bank have valued the property at around 80% of the agreed purchase price (which I thought was a reasonable deal !!).

1. Is this normal practice by banks as a reaction to past lending practice ?
2. Can anyone give me their experiences or knowledge of bank valuations as this is a real worry ?

Very grateful for any advice

Thanks

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quite normal, they do not do 100% nowadays. Think if buying from developer you can get 100%.

Exactly the same thing happened to us when we bought our house almost 9 years ago, so I don't think it is a recent development! I was a bit concerned about it, but our lawyer (who appears to have done everything right as far as I am able to judge) said it was very common, and it didn't affect the amount of the mortgage the bank was prepared to give us. As we paid off the mortgage a few years later when we sold our house in the UK and moved here permanently, it doesn't really make any difference now.

Do you mean that (for example) you've agreed to buy it for £100k and the bank have valued it at £80k? So therefore the bank willl lend you a percentage of £80k?

I suppose it depends on how much mortgage you require and whether you are still prepared to spend £100k on something the bank have only valued at £80k.

I have just been told that [Spanish] banks are only offering UP TO 60% of their valuation now!

So on a valuation of 80K for a property you might pay 100k for, the mortgage can be no more than 48k

our bank manager offered my OH a 100% mortgage a couple of weeks ago should we want one - if we want to buy one of the properties they have on their books


he said thanks, but no thanks

Our buyer has been offered 70% of the valuation.

I’m sorry if I’ve confused things here...what I was trying to ask was:

The bank have offered me up to 70% of THEIR valuation of the property (or the selling price if it is lower)

I offered the vendor 130,000 prior to the bank making their valuation – which seemed to be a reasonable price based on previous sales, position etc.....etc.....

However, the bank valued at just over 100,000.

I was interested if this was normal of banks trying to reduce their exposure to risk and common practice in these circumstances ?

Any thoughts/experiences gratefully received.

PS - Am happy to receive PM's if necessary.

I think you are exactly correct - the banks know that prices are still falling and will continue to do so for some time. Consequently, they are unwilling to loan at the higher value when that is not likely to be achieved in the short/medium timescale.