Mortgage Valuation

dkb

Hi
We are coming to the end of our current deal and got a letter from our provider saying that the house we bought for 126,000 3 years ago is now worth 106,000 so our LTV is 98%.

The house was on the market at 135,000 and when we moved in we ripped out the bathroom put new in and had a conservatory built.

Now I know prices have fallen over the last 3 years but we bought it in a period of growth and houses on the street that are not in as good a position have sold for 120,000 in the last 6 months.

How do our mortgage company come up with that figure and how can we prove the value without going through the rigmarole of applying for a new mortgage then the valuer saying It's worth way less than it should be and having to go through it all again with another lender.

We would have stayed with our current lender but because of their poor valuation the offer they made us we decided to stick with their SVR. however, they've suddenly put it up to 5.69% citing increased business costs as the reason.

What i'm asking really I supposes is how can I get a truer valuation that we can use to get a better deal? It's extremely frustrating.

.....Or is it just a standard way of valuing for mortgages that all providers use. I cannot even do a search for deals as I dont know what we're worth.

Any help appreciated.

keith1950

Hi, sorry but its the value given by the mortgage companies surveyor that counts as far as they are concerned, not what you might get if you were to sell. It might be worth trying to remortgage with someone else and see what their surveyor comes up with.

Cannon_Fodder

They probably did a computer-based valuation. No way for their computer to know about the conservatory etc. You can ask for a proper valuation, it will cost a few hundred...

Depending on lender, some are doing low valuations to protect themselves.

No guarantee the human will differ enough to change your LTV to something wonderful, maybe 90% if lucky, as valuers are also leaning towards low valuations to protect their position with the lenders.

Just playing around with potential figures... £126k plus 10% growth for 2006/7 is £139k, less 20% for the crash is £111k, plus 5% for the conservatory/bathroom is £116k...

dkb

Cannon_Fodder wrote: »

They probably did a computer-based valuation. No way for their computer to know about the conservatory etc. You can ask for a proper valuation, it will cost a few hundred...

Depending on lender, some are doing low valuations to protect themselves.

No guarantee the human will differ enough to change your LTV to something wonderful, maybe 90% if lucky, as valuers are also leaning towards low valuations to protect their position with the lenders.

Just playing around with potential figures... £126k plus 10% growth for 2006/7 is £139k, less 20% for the crash is £111k, plus 5% for the conservatory/bathroom is £116k...

Thanks for this. I'd be satisfied with 116000 if it came out as that. At least it gives some leeway.

So is the best thing to find a deal we like then get them to do the valuation?

The problem we have is that if they then say no to the mortgage because their valuation is too low we then have to look elsewhere and pay for another valuation dont we? Or doesnt it work like that?

Cannon_Fodder

The obvious place to start is with your existing lender. See if they will agree to a proper valuation. Explain the work that has been carried out, and that you don't see how that could have been taken into account.

See what they say a proper valuation would cost. This assumes that a better LTV will get you a better deal with them...if it won't then don't waste your time, of course.

Then it would be a case of trying other lenders. But you have to factor in fees, etc to see which comes out saving you money overall.

If you can only improve your rate by 0.2%, say, then paying a £500+ fee (and for a valuation) is going to hardly be worth it...

And each lender needs a valuation. So pick wisely. Maybe visit a local mortgage broker who can advise which lenders are being most lenient with valuations.

dkb

Thankyou for your response.

HELEN_T_2

Hi Dkb,
I have just joined this forum and as a mortgage broker,I totally sympathise with the situation that you find yourself in, I see "down valuations" time and time again. If you ask a lender they will deny it, but I have been told that they encourage valuers to reduce a valuation by as much as 10%.
Most lenders will offer free valuations and free legal services, as part of their remortgage packages and some might not charge an arrangement fee for a slightly higher interest rate.Depending on how much you owe on your mortgage, it can be better to pay an arrangement fee and have a lower interest rate. My rule of thumb is if your mortgage is over £100k, it is better to have a lower rate and pay an arrangement fee, but this is something that I always double check 1st before making a recommendation.
you could also try a site called Hometrack, which I believe uses the same system as the lenders use for desktop valuations(which they tend to do for remortgages). I think it costs about £20 to use but could be worth a try.
I hope this helps,
cheers Helen

dkb

HELEN_T wrote: »

Hi Dkb,
I have just joined this forum and as a mortgage broker,I totally sympathise with the situation that you find yourself in, I see "down valuations" time and time again. If you ask a lender they will deny it, but I have been told that they encourage valuers to reduce a valuation by as much as 10%.
Most lenders will offer free valuations and free legal services, as part of their remortgage packages and some might not charge an arrangement fee for a slightly higher interest rate.Depending on how much you owe on your mortgage, it can be better to pay an arrangement fee and have a lower interest rate. My rule of thumb is if your mortgage is over £100k, it is better to have a lower rate and pay an arrangement fee, but this is something that I always double check 1st before making a recommendation.
you could also try a site called Hometrack, which I believe uses the same system as the lenders use for desktop valuations(which they tend to do for remortgages). I think it costs about £20 to use but could be worth a try.
I hope this helps,
cheers Helen

Thanks for this Helen. Much appreciated.

Conrad

HELEN_T wrote: »

Hi Dkb,

it can be better to pay an arrangement fee and have a lower interest rate. My rule of thumb is if your mortgage is over £100k, it is better to have a lower rate and pay an arrangement fee, but this is something that I always double check 1st before making a recommendation.
cheers Helen

So Helen, you know a decent 90% remo rate then, that with fees and INTERIM INTEREST on the new and old mortgage would lekly lead to an overall saving compared to the 5.65% the OP already has?

As for your rule of thumb 'it's better to pay a fee for a better rate', I don't know. In my expereince it is nearly always much better to remain on current SVR.

I hope you take interim interest into account - which can often be more than 2 months interest of course.

Hope your now one of those that offers 'free advice' but in reality flogs life cover. Critical illness definitions are usualy way better on older policies, so of course you dont rebroke older polices do you............