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Bank Valuations

Bank Valuations

Old Nov 28th 2011, 9:33 pm
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Default Bank Valuations

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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Old Nov 28th 2011, 10:24 pm
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Default Re: Bank Valuations

As Concierges for the Spanish section of BE we would like to say hello and welcome.

BE is a very large expat website, so if you have problems finding your way around we have concierges who will try to direct you. The moderators for the Spanish forums are Mitzyboy and Fred James, moderators are there to ensure that the site runs smoothly within the rules of BE. Problems and complaints should always be addressed to a moderador who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are friendly and helpful with a wealth of knowledge of the issues of living in Spain. At the top of the page you will find a quirkily named thread called Free Beer which is full of important and useful information. Hope you enjoy your time participating in the forums.

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Old Nov 28th 2011, 10:38 pm
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Default Re: Bank Valuations

Originally Posted by SR66
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

quite normal, they do not do 100% nowadays. Think if buying from developer you can get 100%.
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Old Nov 29th 2011, 12:47 am
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Default Re: Bank Valuations

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.
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Old Nov 29th 2011, 1:26 am
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Default Re: Bank Valuations

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.

Last edited by scampicat; Nov 29th 2011 at 1:28 am.
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Old Nov 29th 2011, 2:31 am
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Default Re: Bank Valuations

Originally Posted by scampicat
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
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Old Nov 29th 2011, 2:56 am
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Default Re: Bank Valuations

Originally Posted by snikpoh
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
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Old Nov 29th 2011, 4:50 am
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Default Re: Bank Valuations

Our buyer has been offered 70% of the valuation.
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Old Nov 29th 2011, 9:42 pm
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Default Re: Bank Valuations

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.
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Old Nov 29th 2011, 9:43 pm
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Default Re: Bank Valuations

PS - Am happy to receive PM's if necessary.
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Old Nov 29th 2011, 10:16 pm
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Default Re: Bank Valuations

Originally Posted by SR66
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.
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.
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