Mortgage approved!

Last Monday, Habito contacted me to advise that Nationwide had agreed our mortgage in principle – subject to valuation. Progress!

The valuation was scheduled for last Thursday (Valentine’s Day) and was being done at the same time as a RICS HomeBuyer Report that I had commissioned. We weren’t expecting to hear anything until this week, but the surveyor called me shortly after his inspection. It was not good news.

Although he liked the property in general, there were a number of issues he wanted to advise me of. Things to do with the external condition of the building, lack of parking space and kerb appeal, the poor state of the windows and a few other issues. His general feeling was that the price we had agreed to pay (£225K) was too high and that he would have expected the property to be in immaculate condition for that sort of money. When I asked him what he thought it was worth, he suggested in the region of £200-£210K. Oh dear.

Although none of the valuer’s observations was enough to put us off wanting to proceed, we knew it would cause an issue with the mortgage offer. Habito confirmed this the following day with the following message:

We have had a response from the valuer’s and they have valued the property at £215,000. This means the loan to value of the application has changed and we are left with 2 options:

1. Reduce the loan amount to £161,250 which is an additional £7,500 deposit.

2. We can continue with the application on an 80% product, however, this would increase to a +1.59% tracker deal (2.34% overall).

The other option is to contact your seller and negotiate the price based on this, even if you meet halfway, this means a lesser deposit you have to make up to keep the lower deal.

Let me know your thoughts

I wasn’t willing to contribute any more towards the deposit as I was already maxed out at over £56K, and neither did I want my monthly mortgage payments to be any higher due to a change in interest rate. I decided the only option was to go back to the estate agent and lower our offer price.

So that’s what I did. I sent a carefully crafted email to our estate agent offering the valuation price of £215K. I was gob-smacked to receive an email response (just over an hour later) confirming the vendor had accepted it! That was a lot easier than we had thought (we expected a counter-offer of £220K at least).

This now meant that our deposit would drop by £2,500 and our monthly mortgage payments would reduce a little too. Also, it will likely increase the amount of money we will be left with when we eventually sell our current house and pay off the mortgage. Cowabunga!

The HomeBuyer Report arrived on Saturday. Although an interesting read that has given us a better idea of what condition the property is in, it hasn’t put us off. We are still excited and keen to proceed.

Earlier this morning, both Mrs FmC and myself received three SMS messages in quick succession (followed by emails) from Nationwide:

1. Mortgage application – Valuation report accepted

2. Mortgage application – Valuation received

3. Mortgage application – Mortgage offer issued

This looked like exciting news to me! It was confirmed shortly after by another message from Habito:

Hope you’re well. Great news: your mortgage application has been approved and has now gone through to offer!

You’ll be receiving the paperwork in the post over the next few days, but I have attached a copy for you to have a look through in the meantime. A copy will also be sent to your solicitor who will be in touch directly to guide you through to completion now that your mortgage has been approved.

If you have any questions between now and completion, don’t hesitate to drop me a message and I will be happy to help!

Fan-bloody-tastic! We have an approved mortgage offer, valid for several months.

On to the next step (and one that I’m actually dreading) – review of searches, the leasehold agreement and maintenance charges etc.

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