Sue Cox is business manager at Bananas Inc
“Ruth should be careful and make sure that £220,000 is not the actual market value. Six months on the market without a buyer suggests that the property may have been over-valued.
It is not stated whether this is a new or resale flat. The risk of over-valuation, as we all know, is particularly acute for new build.
These concerns aside, I’d suggest that she considers a bridging loan to obtain the short-term cash to complete within two weeks. Then, when she has secured the property, she can redeem the bridge with a lower cost remortgage from a high-street lender.
The advantage of doing it this way is that the bridge will be ready in a matter of days and it allows her to borrow against value rather than purchase price. This will minimise the deposit that she has to find.
It is also worth noting that some lenders impose a three or six-month ownership period before they will accept a remortgage application based on the open market value.”
Ian Fitzgerald is area development manager at Thinc Group
“The issue for Ruth is the fact that the majority of lenders will deem the value of the property to be the selling price and not the value listed by the vendor.
She should deal with an experienced adviser and be very explicit about her needs and how she intends to pay for all mortgage costs. The adviser will then be able to select a lender who may consider this and firstly establish the value of the property by instructing a reputable surveying firm. This is important as if the valuation does not match the £250,000, then other alternatives may need to be explored.
A good adviser will have access to bridging finance which Ruth could consider to complete quickly. This will be more expensive in the short term, but once she owns the property she could refinance as most lenders in the market will consider a loan against the value of the property if a remortgage is being proposed.”
Scott Richford is product marketing manager at Mortgage Talk
“If Ruth wants to borrow more than the agreed purchase price in this case, then her options are more restricted. With this in mind, she would have to consider lenders such as Alliance & Leicester, Northern Rock, BM Solutions or Mortgage Express, and specifically consider those products where they offer lending in excess of 100 per cent of the purchase price.
Any application that she might make would, of course, remain subject to income and credit scoring criteria, and, if she has previously been subject to any adverse credit history at all, then this particular route may not be open to her in the current uncertain financial climate.
In any event, all lenders work on the lower of the purchase price or valuation so no lender would legitimately consider working on the higher figure, unless this was a concessionary purchase from a family member.”
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