Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie

Second mortgage - does first mortgage also need property valuation?

Options
  • 25-06-2012 2:44pm
    #1
    Liberty__Belle
    Closed Accounts Posts: 53 ✭✭


    Hi there,

    My husband and I have been given approval in principle for a second mortgage for 150K (max 80% LTV).

    The final approval is subject to a valuation of the property.

    My first mortgage is on a property in negative equity but luckily I have it rented out and it is pretty much servicing itself.

    We have finally found a property we love and it is going for auction. At auction, one is required to pay 10% non refundable deposit and sign the contract. Therefore, I want to ensure my approval in principle does not fall through.

    My question is regarding the valuation.....

    The new mortgage is on a property that should go around 300K. We have 150K in savings so it is only 50% LTV.

    However, do the bank usually require a valuation on my initial property that is rented out?


    I asked my bank official and he said "not always" but this is leaving me wide open.

    If the valuation is carried out on the new property only, my LTV is approx 50%.
    If the valuation is carried out on both properties my LTV (both mortgages combined) is >100%.

    Sorry if this is not clear, I am not good at explaining.

    If anyone has gotten a second mortgage, you might let me know if the bank only required a valuation on the new property or if they also required a valuation on your negative equity property?


Comments

  • Options
    #2
    ShanePouch
    Banned (with Prison Access) Posts: 83 ✭✭ShanePouch


    Liberty__Belle wrote: »
    Hi there,

    My husband and I have been given approval in principle for a second mortgage for 150K (max 80% LTV).

    The final approval is subject to a valuation of the property.

    My first mortgage is on a property in negative equity but luckily I have it rented out and it is pretty much servicing itself.

    We have finally found a property we love and it is going for auction. At auction, one is required to pay 10% non refundable deposit and sign the contract. Therefore, I want to ensure my approval in principle does not fall through.

    My question is regarding the valuation.....

    The new mortgage is on a property that should go around 300K. We have 150K in savings so it is only 50% LTV.

    However, do the bank usually require a valuation on my initial property that is rented out?


    I asked my bank official and he said "not always" but this is leaving me wide open.

    If the valuation is carried out on the new property only, my LTV is approx 50%.
    If the valuation is carried out on both properties my LTV (both mortgages combined) is >100%.

    Sorry if this is not clear, I am not good at explaining.

    If anyone has gotten a second mortgage, you might let me know if the bank only required a valuation on the new property or if they also required a valuation on your negative equity property?

    If I were you, I'd not be paying 10% non refundable deposit based on a few random replies here from strangers. Should the advice you receive here be incorrect, and you lose your money, you will have no comeback.

    "Approval in principle" from a bank is not an offer, and you ought to have these terms explained carefully to you by your solicitor, and seek your solicitors advice before paying a 10% non refundable deposit with an "approval in principle" for a loan from a bank.

    The correct person from whom to get this advice is your solicitor who is likely to be accurate, or if he is proved not accurate carries professional indemnity insurance for you to claim against should his advice turn out to be incorrect and you lose your deposit based on his incorrect advice.


  • Options
    #3
    Liberty__Belle
    Closed Accounts Posts: 53 ✭✭Liberty__Belle


    Thanks Shane.

    I did contact the solicitor who has told me to contact the bank, give them the address of the property we have just found and get cracking on the valuation asap.

    So I have done that. I am just waiting for the bank to get back to me now to let me know if they only require one valuation or two.

    The waiting is killing me so I wanted to know if anyone had gone through anything similar.


  • Options
    #4
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    If your not using the first hosue as colleteral (which you cant be if its in Neg Equity) there would be no reason to worry about your LTV as your LTV is based off the loan to the mortgage your looking to drawdown.

    the bank may want a valuation of the primary house however as part of the approval process but wont impact the LTV.


  • Options
    #5
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    ShanePouch wrote: »
    If I were you, I'd not be paying 10% non refundable deposit based on a few random replies here from strangers. Should the advice you receive here be incorrect, and you lose your money, you will have no comeback.

    "Approval in principle" from a bank is not an offer, and you ought to have these terms explained carefully to you by your solicitor, and seek your solicitors advice before paying a 10% non refundable deposit with an "approval in principle" for a loan from a bank.

    The correct person from whom to get this advice is your solicitor who is likely to be accurate, or if he is proved not accurate carries professional indemnity insurance for you to claim against should his advice turn out to be incorrect and you lose your deposit based on his incorrect advice.

    whilst some good points above. A solicitor is not the person to ask about this.

    Approval in principle isnt worth a crap. So until you have a written mortgage offer from the bank you run the risk if you bid at auction.


  • Options
    #6
    ShanePouch
    Banned (with Prison Access) Posts: 83 ✭✭ShanePouch


    Liberty__Belle wrote: »
    Thansk Shane.

    I did contact the solicitor who has told me to contact the bank, give them the address of the property we have just found and get cracking on the valuation asap.

    So I have done that. I am just waiting for the bank to get back to me now to let me know if they only require one valuation or two.

    The waiting is killing me so I wanted to know if anyone had gone through anything similar.

    I added in a bit about the "approval in principle" which is a term you need to have fully explained. If I were you, I'd be requesting a meeting with my solicitor as soon as possible and approach this in full knowledge of the facts, and then have him give you his advice in writing, so you can have no doubt.

    Remember the wise expression, "purchase in haste, repent at leisure".


  • Advertisement
  • Options
    #7
    Liberty__Belle
    Closed Accounts Posts: 53 ✭✭Liberty__Belle


    Thanks all.

    The actual reply I got from the bank when I asked was this:


    "House Mortgages may also seek Valuations to be undertaken in your case to confirm if the mortgage you are applying for plus the AIB mortgage you have, added together is be no more than 80% of the 2 added current market values of the property you own+the new property(80% Loan to Value)....
    So in all probability your Dublin property may be in negative equity, which will leave it necessary to have as much equity as possible on the new property."

    I guess I have to wait and see what the bank come back with. The wait is driving me nuts.


  • Options
    #8
    ShanePouch
    Banned (with Prison Access) Posts: 83 ✭✭ShanePouch


    D3PO wrote: »
    If your not using the first hosue as colleteral (which you cant be if its in Neg Equity) there would be no reason to worry about your LTV as your LTV is based off the loan to the mortgage your looking to drawdown.

    the bank may want a valuation of the primary house however as part of the approval process but wont impact the LTV.

    The bank has a legal obligation to KYC - Know Your Customer. Consequently, they will ask about current financial commitments and outstanding assets and liabilities, which will in any case become apparent when they do credit checks. They will take that into account when looking at the overall situation.

    To turn the "Approval in Principle" into a formal offer letter requires a formal application, and approval for that will depend on the overall situation, and on many factors.


  • Options
    #9
    ShanePouch
    Banned (with Prison Access) Posts: 83 ✭✭ShanePouch


    Liberty__Belle wrote: »
    Thanks all.

    The actual reply I got from the bank when I asked was this:


    "House Mortgages may also seek Valuations to be undertaken in your case to confirm if the mortgage you are applying for plus the AIB mortgage you have, added together is be no more than 80% of the 2 added current market values of the property you own+the new property(80% Loan to Value)....
    So in all probability your Dublin property may be in negative equity, which will leave it necessary to have as much equity as possible on the new property."

    I guess I have to wait and see what the bank come back with. The wait is driving me nuts.


    If you know the current value of both properties, and you know the value of the existing and proposed mortgages, you should already know your expected combined LTV.


  • Options
    #10
    Liberty__Belle
    Closed Accounts Posts: 53 ✭✭Liberty__Belle


    ShanePouch wrote: »
    If you know the current value of both properties, and you know the value of the existing and proposed mortgages, you should already know your expected combined LTV.


    I do know the value and this is why I posted the question.

    If they require a value on the new property, my LTV is 50%
    If they require a value on BOTH properties, my LTV is >100%

    Herein lies my dilemma.

    I had just hoped someone would have been a similar situation to me and would let me know if the bank required valuations on both properties or just on the new one.


Advertisement