time to re-mortgage few Qs re 'vaule of house'

brians_daughter

Hi all, just hoping someone here can advise/help answer my Qs

Bought my house 3 years ago for £120k, was up for £145 but we know the vendor and he was willing to take the knock for a quick hassle free sale as he was moving with his job.When i bought the price was very competative for the area as it i about 15k spending on it to modernise it to my tastes ie now kitchen, new bathroom, basically every room has been totally redone including doors, skirts, plastering etc.

Now, i know that house prices have taken a tumble nationally over recent months/years, but in my estate (but not on my street as the last 3 to be sold on my street were mine a 3 bed and 2 2 beds across the road)- up to about 3 months ago everything seemed to be on the market and selling for around the same price £150k

I have approached the bank regarding changing mortgage deals as the fixed rate is ending soon and was told they would look at what houses have sold for in the area and do a drive by valuation....here lies my problem!

Recently (last 3 -6 months) there have been 15 houses on the estate that have sold for much less than perceived market value. Although some arent exactly the same house as mine, mine is a 3 bed semi with a sizeable extension, landscaped gardens and conservatory and some of the homes are smaller 3 bed dormers, or 2 beds but some are 3 beds, same as mine without extension and conservatory.

examples are, 1 back to back needed massive renovation, old lady died family sold the house for £70k to the next door neighbour. 3 houses have been repossessed and were in a right state and have sold for 100k (my dad was a builder and went to view these house as was looking for a project to buy and said they needed 25k of money spent on it if he did the work himself) and he expected he could re-sell at £145-£150k, and one round the corner in which a man got murdered by his wife(its a nice estate honestly!) and that went for £85k!

So, i feel a little stuck in the fact that the bank says they will do a drive by valuation and look at previous sales. I actually took a 95% mortgage as i used the other £17k to modernise the property and i am quite concerned that the bank will turn round and say that the house isnt worth what i paid for it given the above examples of what homes have sold for

Am i worrying about nothing? I really dont want to start paying valuation fees and the likes to be told my house is worth 20k less than what i paid for it!

Any advice? thanks in advance

Cannon_Fodder

Even the most optimistic commentators agree that average house prices are still around 10% under the peak prices of 2007. Anyone who took a 95% mortgage out in 2007 is going to struggle to stay out of negative equity.

On paper that might mean your original £120k has become £108k. You may hope to adjust it upwards for recent improvements - the problem is that a drive-by valuation cannot allow for the money you have spent or the conservatory and landscaped garden. And sold prices, while they may not exactly match your property, are setting the new market reality.

To be honest, you got £25k off the asking price so the size of your mortgage is £25k less than it might have been. That is saving you real money over the life of the mortgage. But your "bargain" purchase is one of the statistics that has led to the price drops! I'm not sure you can reasonably expect to be the only person who gets a bargain, while everyone else pays the asking price...

If you wish to not be hampered by regular re-valuations for re-mortgage purposes, pick a longer term product. Or you could opt to drop onto their SVR for a few months, and hope the recent headlines continue to be positive for prices/valuations.

However, be aware that average house price indices and the headlines they produce are only part of the story. Regions/areas fluctuate, i.e Wigan is -18.75% down from peak, while St Helens is -14%, your own area may be better/worse than those, but it shows how the headlines may not apply to everywhere;


[IMG]http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/default.asp?g=1&gt=1&a=Wigan&s=01 January 2007&e=01 April 2010&t=1[/IMG]


[IMG]http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/default.asp?g=1&gt=1&a=St+Helens&s=01 January 2007&e=01 April 2010&t=1[/IMG]

brians_daughter

Thanks for the info.... i actually live on the boarder of these 2 towns (but in an almost semi rural estate) Took me a while to realise i didnt have my location on my username either...what a coincidence!


I assume i could choose a lender that does actual valuations if i were to proceed? Would my house price become more favourable that way do you think? As you say, i may stay on the standard rate for a while, but i just dont want to risk house prices going down even further and being in more/any negative equity

AbbieCadabra

surely it would be better to just drop on to the SVR (whilst rates are so low) when your current deal finishes & then overpay as much as possible? should put you in a much better position if/when you want to re-mortgage again. or am i missing something? (i'm only learning, so it's quite likely!).

brians_daughter

no, i dont think youa re misisng anything tbh overpaying is not an option for me atm, due to circumstances and concerns I would like ot fix for 3 or 4 years so i can budget correctly.

I am planning on cuttting my hours as i am also a f/t student so wanted to get a mortgage secured before sept so when i go into my final year i am not working ft and in my last year, i plan to do post grad study so ideally want to fix for 4 years asap so i know i am sorted with my repayments whilst still studying