Valuation Question

curs82

My partner and I are now coming to the end of our 2yr fixed deal with NR. We have been to a mortgage advisor who has advised us we will be better off staying on their SVR.

He has said that whatever our house is worth, all mortgage lenders are downvaluing by 10% so we are likely to still need a 100% to cover it, which i'm well aware do not exist. We paid £113k for the house and took out a 100% mortgage. Similar houses down our road are up for sale (and selling) for anything between 120-130k.

Would a lender really downvalue it as we have been advised (not calling him a liar, just looking for second opinions!)

If we attempt to remortgage and the valuation comes up short of what we need it to be to qualify for a 90% LTV, do we have to pay for the valuation if we don't/can't take the mortgage we applied for?

Thanks for any help

luckyfool

Depends on the mortgage lender whether you have to pay for the valuation. You will need a valuation of £125,600 to get a 90% mortgage to stack up for a £113,000 loan (assuming you have not repaid anything yet). Valuers will work from actual sale prices (not what properties are marketed for), and will weight recent sale prices from older more out of date ones. If you think there is a realistic prospect of a professional valuer assessing that your property will value for £126,000 in the current market (or if you can come up with any shortfall in the loan size if it is downvalued by a thousand or two), then by all means speak to another broker and make an approach to an appropriate lender on a speculative basis. As long as your broker chooses the right lender that offers a free valuation, has no booking fees, and will not reclaim fees from you, then there is essentially no risk to you. Of course this depends on the broker either feeling that your prospects are good, or charging a small admin fee to cover their costs in the event that it doesn't go through. I'm sure your original broker was just speaking from bitter experience of a number of deals falling through due to over-optimistic homeowners and pessimistic valuations from surveyors.

If you do decide to do something I would do it soon as mortgage rates are generally heading upwards at the moment (though Bank of England Base Rate is expected to fall in the short term).

lisyloo

Similar houses down our road are up for sale (and selling) for anything between 120-130k.

Have any of them sold recently?
Just wondering as if you are comparing with 6 month old situation then that won't be realistic.

Currently very little is selling and prices are plummeting.
It's very difficult to value anything in a market where very few are in a posistion to buy and therefore nothing is selling.

Not wanting to be harsh, but make sure you aren't in denial about what is really happening.

curs82

The most recent sale was 104k 2 months ago and that is 10 doors down from us. The house was gutted with no d/g, c/h etc. It was literally a shell, i'm not pretending mine is a mansion but if I was to hazard a guess I would say it would of needed around 10-15k worth of renovation.

There are others up for sale, but you're correct, they may be on the market for the values I stated but they are still there.

I've got no qualms about staying on the SVR for now, but I just want to make sure I wouldn't be able to fix it by remortgaging. I don't want to agree in principle awaiting a valuation, that to fall short and then be told I need to cough up a valuation fee.

Hindsight is a wonderful thing and all of a sudden the 5yr fixed deal available isn't looking so bad!

JimmyTheWig

curs82 wrote: »

I've got no qualms about staying on the SVR for now

Well that's the good news. Some people will be coming out of their fixed deals and _not_ be able to afford the SVR.

but I just want to make sure I wouldn't be able to fix it by remortgaging.

As has been said, if you can get a second opinion without being charged for it then it's worth a go - but I wouldn't rate your chances.
What you need to do is reduce the amount of mortgage debt outstanding. Are you aware of the pittance that gets paid off each month out of your repayments in the early years? The more you can overpay the better. If you are allowed overpayments (most mortgages allow this) and they get applied straight away (check with mortgage company) then its usually best to make the overpayment on your mortgage. otherwise just make payments into a savings account and when you eventually come to remortgage use this to bring the loan down.
Start doing this now, before the SVR kicks in.

lisyloo

In general valutaions do need to be paid for even if the deal does not go through.
You could try to find a low valuation or even try to hunt for a free one but in general fees have gone up in recent years.

In your posistion I would probably try another two mortgage advisors for free.

If three experts in their professional field tell you the same thing then they are likely to be correct and it won't cost you anything .

luckyfool

lisyloo - on a remortgage there are any number of lenders who will offer a free valuation, and not charge the client. Of course there is no guarantee that the lender will do a full valuation if they can verify with a cheap computer AVM (Automated Valuation Model) that the value estimate from the customer is pie in the sky. In that scenario you would likely get the lender coming back with an early decline for the loan requested.

curs82

What impact will the interest rate drop of 0.5% today have on a SVR? Are lenders going to be passing this onto its customers or will it likely stay at 7.49%?

mick_1967

curs82 wrote: »

What impact will the interest rate drop of 0.5% today have on a SVR? Are lenders going to be passing this onto its customers or will it likely stay at 7.49%?

was wondering that myself!

feisty1

will it likely stay at 7.49%?

This suggests to me you are with NR therefore your only choice is to either stay on the SVR or move. With valuations dropping, as said previously you may find difficulty.

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