The mortgage was agreed in principle, the survey is booked, and then the broker calls: the lender’s valuer thinks the home is worth less than the price you agreed. Now someone has to find the difference, or the price has to move, or the sale stops. None of those has to be decided in the first hour.
What a down valuation is
Your mortgage lender carries out a valuation of the property before it approves the mortgage (GOV.UK). That valuation is for the lender’s benefit, to decide whether it is willing to lend against the home; it is not a survey of its condition (RICS, and the government’s How to sell a home guide). If the valuation comes in below the agreed price, the lender may lend less than you applied for. How much less depends on the product’s maximum loan-to-value (LTV) and how your lender applies it.
A down valuation doesn’t end a sale by itself. Nothing binds until exchange, so the price can still be renegotiated, and GOV.UK says a “subject to contract” price can change.
The cash gap in three lines
If your lender applies its maximum loan-to-value to its own valuation:
- maximum loan = LTV × valuation;
- loan you need = agreed price − your deposit;
- cash gap = loan you need − maximum loan.
In the kit’s own example (page 11), a £400,000 agreed price, a £380,000 valuation, an 85% maximum loan-to-value and a £60,000 deposit mean you need a £340,000 loan but can borrow only £323,000: a £17,000 gap at the agreed price. Lenders differ in how they calculate the maximum, so ask your lender or broker to confirm which figure they base it on before you rely on a sum like this.
Four ways forward
| Option | What it means | Watch out for |
|---|---|---|
| Pay the gap | The buyer finds the difference in cash. | It isn’t lost money, but you pay more than the lender thinks the home is worth. |
| Cut to the valuation | The seller agrees the lender’s figure, so there is no gap. | The seller may refuse or relist. |
| Split the difference | A price between the two, with a smaller gap. | A middle way both sides can see the sum for. Attach an exchange date. |
| Walk away | The buyer withdraws before exchange. | Money already spent is gone, and the next home may be valued low too. |
What buyers can do next
- Ask your broker or lender three questions: what is the new maximum loan, can the valuation be reviewed, and would another product or lender lend more?
- Gather evidence. Find three comparables with HM Land Registry’s free sold-price search: similar homes, nearby, sold recently. If they support the agreed price, they are what a review request needs.
- Decide what you can fund, then propose a figure to the seller, in writing and through the agent, with an exchange date attached.
Remember the other side of your own chain. If you are selling too, a change here can change what you can offer or accept there.
What sellers can do
A down valuation is evidence, not proof. Ask your agent for the comparable sales that support your price, and whether anyone else offered. Look at the latest UK House Price Index for your area too.
Then be realistic about relisting. If a second lender values the home similarly, relisting at the old price may meet the same problem with the next buyer, after months of delay. Before you answer, compare what you’d receive by agreeing a lower price with what you could expect by starting again, counting agent fees, waiting costs and the risk to any onward purchase.