LTV against Halifax Price Index

dannyc28

I just had a worrying conversation with my lender A&L regarding my LTV (loan to value). I bought my vacant run down property 2 years ago for £273K which even at that time was a bargain in comparison to what I had viewed previously. I borrowed £215K against my equity of £100K and used the change to renovate the property. Speaking to A&L they tell me that my house is worth using the Halifax Price Index £229K!!! making my LTV 92% which is ineligible for any of their products. I obviously disputed this but they just shrugged their shoulders and told me that was the average house price against my postcode according to the HALIFAX PRICE INDEX. So I had a look this HPI myself found at
http://www.hbosplc.com/economy/HousingResearch.asp.
Very strangely I found that HPI advised my house would have dropped by 0.2 in the 2 years since I bought it making it worth £272K (this does not take into account the work i did) but also the average price by postcode advised my postcode was £268K making it LTV 79% not the £229K/92% A&L advised me!!!!!!
It's all well and good using LTV for mortgages but it strikes me I am and no doubt many others are subject to incorrect valuations limiting them to what they can borrow and only getting the rubbish deals with big set up costs!!!
Has anyone else experienced this? and does anyone have any advice at what i can do about it?

sherer

i'm in a similar situation with my mortgage. I had a surveyor round and he valued it at 150k which is no where near what my place is worth and hence I can't get the mortgage I want either as that is outside the LTV.

You need to talk to the A + L and see if they will accept an independent survey if you pay for that yourself.

If they are just doing this via the HPI then ask them to do a full survey \ valuation on the property

opinions4u

At a guess, A&L have applied the index against your purchase price, not what you originally believed the property to be worth.

Do they not offer you the option of paying for a current valuation?

While that may not give you the valuation you want, it would at least settle the argument with A&L. To be honest, most homeowners over value their properties, and in a falling market that can mean having to make a big personal shift downwards in expectations when it comes to sale or mortgage deal.

The Halifax House Price Index is a fairly accurate guide, but it only incorporates properties mortgaged to HBOS. Cash sales and sales involving other lenders don't contribute to it. Neither do specific localised changes in the makeup of a neighbourhood or actual improvements/deterioration of a particular property.

If you still have faith in your own estimate of value, remortgage elsewhere - unless the A&L SVR is better!

luckyfool

dannyc28 wrote: »

I just had a worrying conversation with my lender A&L regarding my LTV (loan to value). I bought my vacant run down property 2 years ago for £273K which even at that time was a bargain in comparison to what I had viewed previously. I borrowed £215K against my equity of £100K and used the change to renovate the property. Speaking to A&L they tell me that my house is worth using the Halifax Price Index £229K!!! making my LTV 92% which is ineligible for any of their products. I obviously disputed this but they just shrugged their shoulders and told me that was the average house price against my postcode according to the HALIFAX PRICE INDEX. So I had a look this HPI myself found at
http://www.hbosplc.com/economy/HousingResearch.asp.
Very strangely I found that HPI advised my house would have dropped by 0.2 in the 2 years since I bought it making it worth £272K (this does not take into account the work i did) but also the average price by postcode advised my postcode was £268K making it LTV 79% not the £229K/92% A&L advised me!!!!!!
It's all well and good using LTV for mortgages but it strikes me I am and no doubt many others are subject to incorrect valuations limiting them to what they can borrow and only getting the rubbish deals with big set up costs!!!
Has anyone else experienced this? and does anyone have any advice at what i can do about it?

Ask if A+L will accept a physical revaluation and how much will it cost you. Most lenders will offer that option instead of their system index linked valuation for people in your circumstances where for whatever reason you think their valuation is out of line.

If they say no then you will need to look at a remortgage assuming that would be better than whatever you reversionary rate is with A+L.

dpc197

strange that you get two massively different values when your both using the same objective method. two possible reasons are:

- their initial valuation of the property was not as high as what you paid. you should find their valuation on some of your original docs

-i notice the calculator only goes up to Q3 (end of September) whereas the halifax price index is calculated monthly and so A & L probably also account for oct 08 and nov 08 figures.

the index was 529.5 in nov 08 and about 606 at the end of 2006. that is a 13% drop so that would make 272k now worth 236k. add in the fact that your region seems to be affected more then the 229k looks about right. of course this ignores the work you've done on the property so probaby sensible to get a proper valuation done as those above suggest.

read your post with interest as i'm also looking to remortgage with A & L soon

dannyc28

What worries me though is if I look at an online mortgage finding service such as MoneySupermarket and use the crummy, untrue & unfair 92% LTV that A&L quote me there are no mortgage deals out there for me.
Nobody wants to give me a mortgage?? This is crazy I have a good job and earn enough money to pay the mortgage but suddenly I am a bad risk because of no more than an incorrect LTV valuation by the A&L. Only saving grace is I have another 9 months before my deal finishes and hopefully things will be slightly better by then.

luckyfool

dannyc28 wrote: »

What worries me though is if I look at an online mortgage finding service such as MoneySupermarket and use the crummy, untrue & unfair 92% LTV that A&L quote me there are no mortgage deals out there for me.
Nobody wants to give me a mortgage?? This is crazy I have a good job and earn enough money to pay the mortgage but suddenly I am a bad risk because of no more than an incorrect LTV valuation by the A&L. Only saving grace is I have another 9 months before my deal finishes and hopefully things will be slightly better by then.

Another lender is not going to use the figures on the Alliance and Leicester system. They will normally have a valuer visit your property and come up with a current valuation based on what it would sell for now in todays market based primarily on recent comparable sales. If you think the A+L system valuation is way off then don't let that stop you looking at another lender.

What is the rate your A+L mortgage moves onto at the end of the deal? Is it an SVR, or a margin above base rate? Some A+L reversionary rates are actually really good so you should not assume that you even need to move to a new deal at the end of your current one.

uzubairu

Do you have any savings that could use to lower your LTV?