Posted on 21 March 2011 by Peter Scrivener
I am in the process of selling my house and have accepted an offer of £345,000.
However, my buyer's mortgage valuation has reduced the price by £7,000 leaving us with a shortfall to haggle over.
During these negotiations, my estate agent let me know that our buyers are using a buy-to-let mortgage but that they intend to use the house as their reisdence.
He said that our buyers have other properties that they rent out and use the income to live off - and that is why they can't get a residential mortgage...which sounds a bit odd to me.
The questions - is using a buy-to-let mortgage in this scenario legal? Should we, as the seller care so long as we can strike a deal? And, is there any truth that buy-to-let mortgage valuations are more likely to be reduced than residential mortgage valuations?
As the vendor I do not think you need to concern yourselves with how your buyers are funding the purchase unless you suspect they are laundering money, in which case you should advise your solicitor. That said, it is unusual for them to be using a buy to let mortgage and I suspect that this is down having a very good accountant. BTL mortgages are more expensive than residential mortgages but there can be tax benefits. If you have a concerns you should speak to your solicitor about this.
As to the valuation, it is not our experience that Buy to Let valuations are markedly different to the valuation arrived at for a residential mortgage. I suggest that you look at a property price comparison website, such as Zoopla.Co.Uk which will give you an idea of the price of properties in your area and comparable sales. This will give you an idea whether it is worth holding out for the full asking price with another purchaser or accepting the situation you are in. Depending on your situation it is sometimes possible to pass the reduced price on up the chain.
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