Undervalue by mortgage company

[Sharon Goodchild]

We have just started on the investment property ladder and proceeded to try to buy our first property - a £50,000 buy to let. We have just found out that the mortgage company (Natwest) has undervalued the property at £45000 and will not lend on it as the minimum value must be £50k. We researched the value and it is correct for the area plus is a good rental return. What do we do now? Try another lender? Start again with more expensive properties so it gives us leeway if they undervalue again? Can anyone recommend a good buy to let mortgage company?
Any advice would be most welcome.
Thank you

 

[TobiCapital]

Hi Sharon,

Sorry to hear this. I know a lender that will consider properties under £50k, however the rate will be higher than Natwest.

Are you buying a house or flat? Will you look to renegotiate with vendor given property is worth £44k, not £50k initially agreed too?

 

[realdeals]

This is a double edged sword - you might be able to negotiate the price down but it looks like you might struggle to secure a mortgage.

I would look towards one of the specialists in this field although you might need to pay a premium on the average mortgage interest rate. Have you also considered the issue of reselling the property in the future? If the value remains under the minimum level for the likes of Natwest then other potential buyers in the future might struggle to get a mortgage. A reduction in your potential purchase pool would reduce competition and could have an impact on any future sale price.

 

[Peter123]

Use a different lender
A buyer could apply again with a different mortgage lender in the hope they’re appointed surveyors will view the property in a different light. However, this may affect other stages of the application if numerous credit checks have been completed in a short period of time.

 

[Longterminvestor]

Are there any niche lenders/private banks that would accommodate such a situation? Don’t forget, while you may pay a slightly higher interest rate you are potentially saving £5000 on the purchase price.