MarkO

Question about mortgages in Scotland: basically we have to have a self-cert mortgage, because my earnings are 'complicated' over the last 8 months, so I wouldn't be able to produce a decent average salary.

We're probably going to go with Bank of Scotland (our previous provider) who do a self-cert mortgage of up to 85% LTV. That's not a problem, except that the LTV is only on the valuation of the property, but under the Scottish 'offers over' system we'll probably have to bid more than that.

So, for example, if a property is valued by the surveyor at 100k, then we can get a mortgage for 85% of that, which isn't a problem. However, if we have to bid, say, 120k to get the house, then we suddenly have to find another 20k in cash to buy it, which is a PITA - effectively, we'd have to stump up 35k deposit to get a 90k mortgage on a 120k property!!

So, what I want to know is:

a) What banks do self-cert mortgages.

b) Are there any self-cert mortgages which will lend relative to the purchase price, rather than the valuation price.

I know there was a thread on self-cert mortgages which mentioned a few banks, but what's an updated list of banks worth contacting for this type of lend? Any people with experience of the Scottish system who can help with this?

Oh, and they have to be decent banks in terms of getting going, 'cos we need to get the mortgage agreed by the end of next week.

carl

Our self-cert is through "The Mortgage Business" who are owned by HBOS. Now since the 'BOS' bit of 'HBOS' means 'Bank of Scotland' you'd think they'd be acquainted with the Scottish system?

I know properties in Scotland go for well over the advertised price, but surely the 'valuation' is an indication of how much the property is worth (i.e. how much it could be sold for?)

Carlos The Jackel

Depends really - where I stay 20% over valuation is the current average.

imlach

MarkO,

Other option is to persuade your surveyor to up the valuation slightly. They do tend to be slightly flexible on this - ie, our surveyor upped the original pre-purchase valuation by 10% once he found out the level of interest in the property and how many offers (16!) there were....

One to ask your solicitor and/or surveyor.....my solicitor is friendly with the surveyor hence maybe more flexible than some.....

(scanner still waiting for me to bring it back to you!!! I'm am a bit lazy - apologies!)

imlach

Forgot to add, I've never seen mortgages that offer more than 100% of valuation other than these student/parent type ones and/or first-time buyer ones which maybe go up to 105% (or was it 110%?).

Prob get hammered on interest rate and indemnity protection though......

MarkO

I'll see if I can speak to the surveyor and get him to up the value. It didn't work with our last survey though.

Actually, I'll need the scanner fairly soon. Any chance you could bring it down to Glentress at the weekend? I'm working at the Hub on Sat & Sun...

imlach

MarkO, yes, I'll get it to you this weekend - will email you offline to arrange.....

MarkO

Carl, as mentioned, the average at the moment in the borders is 20-30% over the valuation figure.

BoS should understand the Scottish system, but they will only do the LTV based on the valuation or schedule ('offers over') figure, whichever is higher - irrelevant of how much over that the house actually sells for. Which is why it's a PITA.

MarkO

Imlach, I'm not worried about getting a 100% LTV - so that's not a problem. I'm quite happy to get 85% LTV, just as long as the 'V' part is the price we pay, and not some irrelevant figure that's 20-30k less.

The main thing is that whilst we could pay the extra cash out, I'd really rather use it for other stuff* than unnecessarily sticking it into a mortgage deposit...

* Like a new MTB, new Land Rover, a rayburn for the kitchen, etc., etc.

imlach

[edited to take out my comments as irrelevant]

Doubt you'll get anywhere with the banks on this one - everyone is in the same boat, and no-one I've ever known has managed to get V above surveyor's valuation!

Go on, prove me wrong :-)))


[Edited by imlach - 9/11/2003 10:54:40 PM]

[Edited by imlach - 9/11/2003 10:56:39 PM]

Diablo

Mark, I agree there is something far wrong.

But the problem isn't so much the system, as the valuer's basis of value.

Take this example.

Property expected to sell for 160+k

Values at 155

Goes on sale at offers over £130....

Makes £165.

In that example, the valuers knew the market well enough to know that the offers over price was way below "value", and valued it accordingly.

The trick is to find the right valuer, who accepts that value is higher than for sale price - because all estate agents will suggest an offers over price way below what is expected, simply to generate greater interest in what is already a boyant market, which in turn pushes prices higher.

We've just bought new build.

Valued at exactly the fixed selling price, yet if it had been offers over, the quoted price would have been less than that. The real question is, what would it value at?

The trick, I believe, in your case of self cert is to quietly agree a deal with the sellers first, if you can, (legally in writing, although subject to whatever) and get them to change to a fixed price on the face of it (for the agreed price or higher) and then get the valuation done.

At the end of the day, the valuers shouldn't be prejudiced by this, but will probably value it on or around the fixed price.

Cynical, but true.

D

MarkO

Nice idea, Diablo. We'd have done that if the opportunity had presented itself. Unfortunately, by the time we saw the place, there were already 2 notes of interest - meaning that even if they wanted to, it would have been illegal for the vendors to do a direct private deal with us.

MarkO

Interesting. I'll check that with my Solicitor next week. I'd imagine that the 2 people who've already surveyed would be a bit miffed if the vendors accepted an offer from us without even allowing them to bid though!!!

imlach

Well, if your informal "chummy" offer was good enough, the seller can just set a closing date for 12pm/5pm/whenever that day and it is up to the other 2 to decide if they will offer.....which they would do if they have surveyed unless the survey threw up something bad.

Seller can choose to accept any offer he likes obviously - not just the highest one.

However, no doubt the seller wants to maximise price attained, and so would likely set a closing date with a few days notice to maxmise interest.

mik

Imlach is 100% correct MarkO.

We just sold after a suitable offer was made ~ under Scottish system, when a note of interest is made you're legally bound to give all note-of-interesters the opportunity to bid. It's still "blind" (officially at least I guess), but they have to show their cards within a short space of time.

The original offer we recieved was more than the two others who'd noted interest were able to go to. It can work for you mate!

You're unfortunately in the same boat as most 1st time buyers in Scotland. Anywhere "nice" always demands well beyond survey price, let alone asking price.

Where we are it's min 30% and anywhere up to 50% above asking which still comes out 10-15% above survey valuation. Even 1st time buyers taking 100% mortgages therefore need to find several tens of thousands, which is obviously beyond the means of most.

I doubt you'll get a surveyor to up their valuation.

Scottish system has gone daft. [img]images/smilies/mad.gif[/img]

Ironically part of the reason it's spiralled is 'cos folks come up from "dahn sowff " and have huge equity, so they snap up properties at relatively cheap prices compared to "Lahndun" for example, and push all the prices up.

mik

Forgot to say - we just sold house after 4yrs and got 85% more than we paid - market still strong if you choose location wisely. Overbidding by a couple of £k to secure therefore becomes irrelevant after a couple of years.

MarkO

As you say, it's not just us southerners. Particularly in the central Borders (Peebles, Gala, Kelso, etc) there's a lot of ex-Edinburgh people moving out 'cos for the price of a 2-bed city-centre flat you can get a 3/4-bed detatched house and still be without 40 minutes of the City. The Scottish executive hasn't helped.

What you say about bids not being totally secret does seem to be the case. I sometimes wonder how anybody manages to buy a property at all, really. The last house we bid on was on the market for 230k, valued at 270k, and went for well over 300k - but those figures are just seemingly plucked out of the air.

The other thing I don't understand is that if 3-4 months after buying the place I decided to switch mortgages, then the property would have to be re-valued. In which case surely the bids/most recent purchase price would have to be taken into consideration in that valuation? So I presume that if I remortgage a few months after buying, I may be able to negotiate a loan based on something closer to the purchase price, and not so tied in to the valuation from when we bought it? Is that the case, or does it not work like that in practice?

workshy_fopp

Can't you get a "normal" mortgage?

I'm a contactor paying myself buttons as a salary. On my first mortgage, I just went to the Bank of SCotland, where I have my business account and got one no problem. If you're putting down a decent deposit, then I'm surprised they're bothered, as they'll be quids in if you don't keep up payments.

mik

Not quite plucked out of the air Mark

House A in location Aesville is on the market at offers over £200K. Aesville isn't popular and everyone knows it'll go for less than 10% over.

House B is situated in Beesville is also up for offers over £200K. Beesville is lovely. Plenty of good MTB runs, free scoob for every house....that kinda thing . Everybody knows houses in Beesville go for min 30% above asking and anywhere up to 50% over.

The irony is of course that the owners of House B will never accept anything less than £260K.....and are hoping it'll push £300K. They know it, buyers know it too. Why they don't just lose the % p1sh is beyond me (although it's in the interests of the estate agents who try and set a ramped commision fee if you let them ~ going to big bucks "if we get you more than £x" ~ which they of course know they will! [img]images/smilies/mad.gif[/img] )
You have to rely on your solicitor to guide you.

I assume the re-mortgage in 6 months scenario you've painted would work, but never tried it myself. I'd have a chat with the bank.

BTW we've just gone BOS / Halifax too ~ they're very competetive @ the moment.

MarkO

WS Fop, can't get a 'normal' mortgage, 'cos my salary for the last 8 months would only allow me to borrow about 8k.

But it wouldn't make any difference anyway, since they'll only allow you to borrow 3.5x your salary, up to 95% LTV. So even if my salary was enough to borrow for the valuation, we'd still be in the same situation relative to the purchase price.

Basically, having looked/phoned/researched, no lender will lend based on purchase price. It's all based on valuation - which kindof makes sense from their point of view, even if it doesn't make sense from ours.

Diablo

Hmm..interesting points.

I certainly wasn't aware that you legally had to give anyone who has provided a note of interest the opportunity to offer under Scots law.

Nor do you have to go to a closing date. The seller is at liberty to accept or reject any offer, at any time, without obligation.

When buying our last house which was bought on the offers over system, there was us and one other interested party. Estate agent "forced" a closing date and we said fine, interest withdrawn, cos I wasn't going down that road again.

Other party thought they had won a watch, pitched in with a low offer and the seller phoned us direct, asked us what was going on and we explained our position. Agreed a price and did the deal.

Other party were given no opportunity to bid higher (which they would have)

As far as I was aware (wife has industry experience) all a note of interest does is require the selling agent to advise you if a closing date is set. If no closing date, tough.

In Mark's case, sure its a gamble, but what would you rather have -a good offer now with all terms pre agreed, or the possibility of a higher one, but then maybe not?

D

imlach

MarkO,

Wrong - a note of interest does NOT preclude anyone doing a deal. The seller can choose to take any deal but just tell the notees that an offer has been tabled and they have until, say, 5pm to react.

A note of interest does not give a legal right to be able to submit an offer AFAIK.

[Edited by imlach - 9/12/2003 9:41:52 PM]

MarkO

You're right, the Scottish system has gone daft. But even if you are a 'southerner' come up with a load of cash, it's still no good. I mean, as in my example above, needing 35k cash to buy a property for 120k is just silly!

Oh, and if a closing date has already been set, I don't think it can be changed. Ours has a date set, so it's too late for offers.

Plus, surely if we suggested a bid now, they would simply go to the other noted parties, and say "Well, it's worth at least this offer, so can you better it?", giving the other bidders a chance to top our top bid....

[Edited by MarkO - 9/12/2003 10:27:10 PM]

Carlos The Jackel

Hmm - its all the southerners fault Well we were lucky enough that our valuation was high to help us get the property. It was valued "properly" at £46,000, they valued it at £50,000 so we could bid a bit higher as we were first timers and the market is all t1ts up! We got it for £50k. That was 3 years ago and now its worth around £90,000 but would only probably be valued about £75k!

[Edited by Carlos The Jackel - 9/12/2003 10:42:01 PM]

imlach

MarkO - yes, if the closing date is now set, and there are 2 other parties, you DO NOT want to show your hand before the closing date. Even if no closing date set, then yes, showing your hand is dangerous....

Just hope that no-one is on the "inside" when it comes to the bidding. A LOT of friends have missed out on properties by £1 or similar stupid amount in the blind-bidding....and EVEN when the offers have been £234862 or something - and they were beaten by £10. Hmm.....bit fishy.

For instance, I have another mate who plays rugby with a solicitor and he's told him before he can "help him out" in securing somewhere.....obviously all against law society practice!!!

[Edited by imlach - 9/12/2003 11:01:25 PM]

mik

Alright it's not entirely the fault of southerner but the market for desirable areas is only really open to those with plenty of equity. That means folks who have money / have made money on previous property. Even folks on good salaries can't easily break into a desirable area (I know that doesn't read right! ) 'cos they're lacking a lump sum.

A property with an announced closing date can still be open to a "take it off the market" offer ~ only those who've noted interest will be informed and asked to get their bids in el-pronto.

When selling our previous property (flat in Glasgow city centre) we were offered cash the day before closing date to take it off the market..... We held off and recieved £15K more ~ from a London solicitor buying for his daughter funnily enough

At the end of the day it'll be down to the seller. If your offer is good, seller may bite and push closing date. If it's average however they're likely to simply hold for the existing closing date, and hedge their bets.

Another aspect a paranoid person may suggest (not me of course) is the whole concept of blind votes. I'm certain no estate agent would illegally provide info to a solicitor to maximise selling price (and estate agent commision) , but it is interesting that ours has always held off placing our offers 'til 5 mins before closing (literally). We got our current house (which we've just sold) by a £200 margin following solicitors last minute advice

Figures as stated by the seller........ lucky eh?

We got our new house by less than £1K. (again info via seller).

Good luck Mark & welcome to the Scottish system





[Edited by mik - 9/12/2003 11:19:01 PM]

imlach

Yes....our solicitor also does not fax the offer until the last minute - in the case of the house we last bought, he actually delivered the offer by hand at 11.55am for 12pm closing date as the selling solicitor was round the corner from his office!

Make sure your solicitor has a reliable fax machine though!! Also, it could be engaged from other solicitors faxing in their offers (although your solicitor obviously would phone and say he's having trouble getting the offer through - in which case the selling solicitor would wait as it is in their interest).

Our most recent house, there were 40+ notes of interest, and 16 offers...we won, just! Two of the other offers were within £1k of me.....what I told my solicitor to bid at 10am in the morning was £2k less - I only upped it by £2k at the last minute on the phone to my solicitor - PHEW!
That was £100k over asking price :-(





[Edited by imlach - 9/12/2003 11:48:42 PM]

MarkO

Just to update this thread, we got sorted with an 85% self-cert fixed-rate mortgage which started the day before the first rate-rise in around 4 years.

We're happily settled in our new house now and loving it.

imlach

Glad it has all gone well for your Mark.
Enjoy the house - looks lovely.