Remortgage Valuation Issues

janmolby

Hello ladies and gents

Looking for dome advice – I bought my house (new build) in November 2005 on a 3 year fixed. As this was coming to an end, I contacted First Direct about a remortgage 3 months ago and have been going through the process since then. The application sailed through and was accepted subject to a valuation.

I bought the house for £313k was being very (very) bullish when I completed the re-mortgage application and valued it at £400k. In reality, I think it is worth nearer 340-350k but as the true value is well within the 80% LTV I need for the fixed rate, I thought I’d see what the valuer came back with. I was so confident that we’d get 80% LTV that I booked the fixed rate!

Here’s the problem – the valuer came back with £200k!!! :eek: Basically, he had used comparables of properties which were miles away and were very different to mine (size, location, etc.)

I was shocked and asked First direct what I could do to appeal so they asked me to send them comparables of properties. So far, I have sent them details of a) smaller houses (on my estate, built at the same time) which are currently on the market for approx £320k, b) smaller houses that sold in June 2008 (new build) at £340k and c) same size house on my estate that sold in May last year (peak time, I know!) for £350-£380k. They sent these details to the valuer who has rejected them and maintained his valuation of £200k. :mad:

I then called the panel who First Direct use to choose valuers (who have been very helpful) and they got another valuer to do a valuation. He came back with £260k! :rolleyes:

Both valuers are disregarding the comparables I have sent them (I accept that estate agents values are not going to be pinpoint accurate but they’re unlikely to overvalue a house by 30-40%, aren’t they?!) and they’ve disregarded the 2008 house sales data. In fact, on the latter, they’ve said that the market is very different now than it was then (no kidding!) but it can’t have fallen by 30%! :mad:

This leaves me in a quandary – First Direct has the offering I want but even the second valuation would give me a LTV of 100%.

Any thoughts?

getmore4less

The first thing to do is look at what your current lender has to offer since this is unlikely to require a new valuation.

This will be the follow on rate on your existing deal, they may have other offers.

Start planning for the follow on rate while investigating the other options.


I think you have to be relalistic, the current new build selling prices will be much lower than that on the land registry, what are the current builder incentives, round our way there are Stamp duty paid, mortgage paid for 2 years, seller deposits etc, these knock 10%-20% of the asking/registered prices and prices have been dropping as well.

If £260k is 100% LTV then you need a valuation of £325k to get the 80% that will probably not be reachable since you say £350k last May 20% off peak with further fall to come a cautious valuation would be under £280k.


ANYONE that remortgaging now that is over 50% LTV should be looking at long trerm(5y+) deals with very good follow on rates if not they are going to come unstuck on 2-3 year deals when they come to remortgage and find they are 80%+ LTV or in negative equity.

janmolby

Thanks for the feedback. I appreciate that I need to be realistic but am trying to understand how a new build bought at end 2005, can rise in value during 2006 and 2007 and then drop t0 83% of the purchase price? And how can I trust valuers who are £60k apart in valuations?

dunstonh

new builds are typically more expensive than comparable houses when purchased from new. The minute you move in you lose money. Often around 15% straight away. Market movements upwards may hide that but downwards you will see the hit. That is why you always see references to new builds suffering more when prices drop.

In a rising market, a valuer will have a margin of error and as will the lender to lend more than perhaps they would normally do. So, you may find houses are actually priced more than they really are. In a falling market not only do the prices do down but that margin is removed and a bit of foward looking takes place as well. So a bit of margin that used to be in your favour is now against you.

The other thing to remember is that houses dont come with a price tag attached. Its a judgement call on what someone is willing to pay. In a falling market valuations are much harder to call than in a rising market.

koexelek

getmore4less wrote: »

The first thing to do is look at what your current lender has to offer since this is unlikely to require a new valuation.

The problem you have at the moment though, is a lot of lenders ( like Halifax and Nationwide) index link the valuation on their system.

I arranged a Nationwide mortgage for a client a couple of years ago at about 85% loan to value, but now they say he only has 5% of equity in his house, so is not eligible for their better deals.

jiggy2

dunstonh wrote: »

new builds are typically more expensive than comparable houses when purchased from new. The minute you move in you lose money. Often around 15% straight away. Market movements upwards may hide that but downwards you will see the hit. That is why you always see references to new builds suffering more when prices drop.

In a rising market, a valuer will have a margin of error and as will the lender to lend more than perhaps they would normally do. So, you may find houses are actually priced more than they really are. In a falling market not only do the prices do down but that margin is removed and a bit of foward looking takes place as well. So a bit of margin that used to be in your favour is now against you.

The other thing to remember is that houses dont come with a price tag attached. Its a judgement call on what someone is willing to pay. In a falling market valuations are much harder to call than in a rising market.

i think i had a bit of better luck with my valuer (with First Direct as well)...bought in Jun 07 for £250k (peak price)...valuation came back last month at £225k (fall of 10% but considering new build and the fall in prices in the last year I can't really complain).

I think the tidying up of the flat paid up! :rotfl:

Greenr

koexelek wrote: »

The problem you have at the moment though, is a lot of lenders ( like Halifax and Nationwide) index link the valuation on their system.

I arranged a Nationwide mortgage for a client a couple of years ago at about 85% loan to value, but now they say he only has 5% of equity in his house, so is not eligible for their better deals.

Hi
I'm due to remortgage in June 08. My mortgage is currently with Halifax so does that mean they will do a valuation on my property to offer me a new fixed rate deal? Also, as I live in a flat will they actually turn up to carry out the valuation or go by recent sales in the area?

Does anyone happen to know whether if I go onto the Halifax SVR at the end of my fixed rate, will I be tied into this or can i then revert to a new fixed rate deal at anytime?
Thanks!

dunstonh

I'm due to remortgage in June 08.

I think you mean 2009 and why are you due to remortgage? Your deal expires but that doesnt mean you have to change lender.

My mortgage is currently with Halifax so does that mean they will do a valuation on my property to offer me a new fixed rate deal?

If they offer you a new deal then they will not do a new valuation. If you remortgage the new lender will.

Does anyone happen to know whether if I go onto the Halifax SVR at the end of my fixed rate, will I be tied into this or can i then revert to a new fixed rate deal at anytime?

If you dont buy a new deal then you will not be put on a new one automatically and you will have no new tie in.

Greenr

dunstonh wrote: »

I think you mean 2009 and why are you due to remortgage? Your deal expires but that doesnt mean you have to change lender.



If they offer you a new deal then they will not do a new valuation. If you remortgage the new lender will.



If you dont buy a new deal then you will not be put on a new one automatically and you will have no new tie in.

Opps, sorry meant June 09! I hope to stay with my current lender if they offer me a good deal or I was thinking of staying on the SVR for a few months and then fixing (depending on the fixed rate deals I'm offered). My current rate is 6% and I see that Halifax SVR is now 5%. I'm slightly worried that our LTV will mean that we can't get a good rate.... but I suppose I'll just have to wait and see. The worrying thing is that I have no idea what our property will be valued at in June 09... Any advice? Thanks.

Lynn11

Everyone is talking about LTV? How do you find out what your property is worth? Our fixed rate deal runs out end May 09 and due to job uncertainly and other matters I would prefer to get a reasonable deal from our lender but we will be talking to our financial expert about other deals. How can we compare if we are not aware of what our house is worth as I know how much we have left to pay on the mortgage. Anyone advise me please.

silvercar

Your starting point is the price that properties like yours have actually sold for. Try houseprices.com or similar. If you are looking at new build sold prices you need to knock 10-20% off for the vendor "gifts" which artificially inflate the prices. Another place to try is zoopla.com, which should give an estimate of your current house value if you have bought since 2000.