How do lenders value property for a re-mortgage application?

Flewog

Apologies if this is a really obvious question, but I'd love someone to put my mind at ease!

When our existing fixed-term mortgage comes to an end next year and we want to re-mortgage, how do potential new lenders assess the value of our property? Do they...

a) go by what we paid for it (unlikely, I know!)
b) calculate an approximate value considering what other stuff nearby has sold for recently
c) send someone round to do a proper valuation/survey

We bought our flat in May 2007 with a ten per cent deposit. We'll have saved a further five per cent to bring down the remaining loan by the time we need to re-mortgage in May 2009, but my worry is by then the flat will only be worth as much as the remaining mortgage (if that!) which essentially means we won't be able to re-mortgage and will have to stay on our current lender's SVR forevermore. Is that right?

And finally, does the fact that we now earn quite a bit more than we did when we first bought the flat have any bearing on what risk lenders will take on us?

Thanks for any advice!

koexelek

c)

or if the loan to value is quite low.......b

The surveyor will take into account what similar properties have been selling for when they value yours.

I am finding surveyors are being very harsh on valuation prices at the moment.