Trying to keep my great deal from the Co-Op...

SuperMarianPahars

Hi,

I’m a recent subscriber and first time poster. I just wanted some advice on my mortgage quandary as my fixed rate (4.9% on £181.5k) ends in February. Spotting that things were going to get worse before they get better I managed to get an early offer in principle from the Co-op bank for a tracker at 0.99% over base with no set-up/legal/arrangement fees. This was based on max 75% loan to value and having to be a co-op bank customer (which I am). Its also collared at 3%.

As you can imagine, this is a deal that is considerably better than anything on the market at the moment. However, the problem came when I got my house valued. I paid £278k for it 18 months ago, and the valuation the Co-op had done is now valuing it at £230k, which is £9k less than I need to achieve the 75% loan to value. The cynic in me could think that they are instructing the valuers to value low so they don’t have to honour that mortgage deal. Looking on-line, the best I can find elsewhere is now seemingly over 5% with at least a £600 set up fee. Bizarrely, the next best deal is for me to go onto my variable rate and sit on that for a while (4.75%).

I am therefore wondering:
1) Is there any scope to challenge a valuation? I know house prices are dropping, but I’m sure I wont have gone from £278k to £230k in that time (especially as I have spent over £10k on improvements). I am told that valuers have been laid off and now companies are spreading valuers much more thinly, so they have less understanding of local prices.
2) The other tactic I am considering is just getting a personal loan on the £9k I need to make up the value to 75% loan to value. A personal loan at 7.8% on that small element is a cost worth bearing if it means saving the great deal on the remainder of the borrowing. Anybody have views on this?

Sorry for the rambling message, but I felt like I was getting one over on the banks when I managed to get that deal. Now I feel they are trying to get one over on me….

Cheers

latecomer

I would certainly contest it as you have nothing to lose by doing so. Have any similar properties sold recently to compare against?

luckyfool

I would look at overpaying the difference to get the deal, and look to overpay and pay off any additional loan as quickly as possible.