Mortgage query - advice please!

adam_ironside

I currently have a mortgage with HSBC and want to take some of the equity out of the home (£20,000) to do a loft conversion. For new customers they will loan up to 90% LTV, but for existing customers borrowing more they ask for minimum 75% LTV (which seems a bit strange).
Our mortgage is £122,000 and we bought our victorian terraced house in 2007 for £178,000. We have since totally renovated the house (central heating, new kitchen, bathroom moved upstairs, plastered throughout etc..... ). When applying for the re-mortgage I estimated the house to be worth £190,000 (basically adding a bit for the renovations but taking off a bit because of the economic downturn), which would give us 75% LTV after the £20,000 has been borrowed. HSBC have done the credit checks and affordability stuff and it has all gone through.
So.... It all now hangs on the valuation - which concerns me as in the current climate it would not surprise me if surveyors are massively undervaluing properties. My query is this:

1) If the surveyor (who comes on tuesday) undervalues the house and says it is worth say £180,000 will HSBC just say game over? or will they say "at this value we will amend the offer and lend you max £13,000" (or thereabout) or would i need to go through the whole application process again for the new lower amount?

2) Will the surveyor or bank take into account what the money is being spent on. The loft conversion will at the very least pay for itself in terms of the added value to our home - but will they care?

3) Also, are the banks rules about 75% LTV absolute? or is there any room for negotiation? I have been a good customer and have a good credit rating. If the house is worth close to the £190,000 can they use their discretion or will it be a case of computer says no?

If anyone has had experience of this or works in the industry your comments would be greatly appreciated.

opinions4u

adam_ironside wrote: »

So.... It all now hangs on the valuation - which concerns me as in the current climate it would not surprise me if surveyors are massively undervaluing properties.

It's called valuing appropriately in the current market conditions. Sensible valuations.

1) If the surveyor (who comes on tuesday) undervalues the house and says it is worth say £180,000 will HSBC just say game over? or will they say "at this value we will amend the offer and lend you max £13,000" (or thereabout) or would i need to go through the whole application process again for the new lower amount?

Depends on the lender. In my experience I would expect them to tell you what they can do, rather than just decline you.

2) Will the surveyor or bank take into account what the money is being spent on. The loft conversion will at the very least pay for itself in terms of the added value to our home - but will they care?

I would ask the lender to pass your plans and estimates on to the valuer so that they can be taken in to account. (I assume you have the appropriate planning consents).

3) Also, are the banks rules about 75% LTV absolute? or is there any room for negotiation? I have been a good customer and have a good credit rating. If the house is worth close to the £190,000 can they use their discretion or will it be a case of computer says no?

Nothing to do with computers. You won't get them to change their lending policy.

If you don't get what you need, consider a remortgage elsewhere.

adam_ironside

Just for anyone who reads this in the future....
the valuation went through fine in the end. Worried about nothing.