remortgage less than market value?

meantatz

could anyone tell me what percentage santander would reduce the value of a house when you ask to remortgage?
I have a feeling that the value has been reduced by 18%

funfunder

Ours was under valued by about 18.5%!!!

roonaldo

your question makes no sense.

funfunder

????? It makes sense to me!!!

bordercars

i want to remortgage, my house is worth X how much less will santander allow me to borrow on it

meantatz

I was just hoping that someone in the industry could say that it is maybe usual practice to devalue property by say 15 to 20%?

kingstreet

The question is certainly badly phrased.

For a remortgage, the lender has a surveyor visit the property to establish the value of the property as it would with any new purchase mortgage application.

The property may be downvalued if the surveyor feels the value put on the application does not match his opinion on what the property might fetch in the current market if it was, for example, to be repossessed. He will normally obtain comparable evidence of three similar properties in the area which have sold recently.

There is certainly no fixed percentage involved, otherwise we'd all simply increase our values on the application by this alleged 18% or 18.5% wouldn't we?

bordercars appears to be talking about the loan to value - ie the amount of equity/deposit against the value/price of the property.

it is maybe usual practice to devalue property by say 15 to 20%?

It isn't. Each case sees the surveyor compare the price/value on the application against what's happened in the market for similar properties.

funfunder

No one came and valued our house. They went about 18.5% under the going rate around here. For example our neighbours recently sold for £9000 more than our valuation however the house needed a new kitchen, bathroom, on suite. It's not been decorated in 15 years. It needs central heating. Our house is in excellent condition with new heating, kitchen ect. It doesn't matter to us as we only want a small mortgage against value. We actually. Worked on a value of 20% below what we would hope to get. So technically it's 40% below selling price. If that makes sense.

meantatz

my appologies for badly phrased question,
but if 2 people on the same road have their houses valued their lender for a remortgage, one is valued at £90,000 and the other at £92,000.
Two other houses sell at the same time at £110,00 and £113,500.
Equity in the houses for remortgage is between £60,000 - £70,000.

Also a house valued by lender at £55,000, then valued by independant surveyor at £70,000.

As I said the reduction that lenders value property seems to be 15 - 18% less than market value, is this how they keep a cushion to protect themselves incase of reposession?

kingstreet

funfunder wrote: »

No one came and valued our house. They went about 18.5% under the going rate around here. For example our neighbours recently sold for £9000 more than our valuation however the house needed a new kitchen, bathroom, on suite. It's not been decorated in 15 years. It needs central heating. Our house is in excellent condition with new heating, kitchen ect. It doesn't matter to us as we only want a small mortgage against value. We actually. Worked on a value of 20% below what we would hope to get. So technically it's 40% below selling price. If that makes sense.

No valuation? Can you tell me which lender you were with and who you were moving to?

Many of the things you mention would help the sale of a property but would not necessarily increase its value.

kingstreet

meantatz wrote: »

my appologies for badly phrased question,
but if 2 people on the same road have their houses valued their lender for a remortgage, one is valued at £90,000 and the other at £92,000.
Two other houses sell at the same time at £110,00 and £113,500.
Equity in the houses for remortgage is between £60,000 - £70,000.

Also a house valued by lender at £55,000, then valued by independant surveyor at £70,000.

As I said the reduction that lenders value property seems to be 15 - 18% less than market value, is this how they keep a cushion to protect themselves incase of reposession?

Firstly, lenders don't value property. They have inspections carried out by the same surveyors who carry out valuations and surveys when people buy houses.

The Royal Institution of Chartered Surveyors has a manual surveyors use for valuing property called the Red Book. This helps to avoid large variations in value where two surveyors value the same property.

Are you sure you are talking about examples where properties were inspected and not cases where desktop valuations were used, such as the HomeTrack system?

Were these "remortgages" borrowers returning to their existing lender for a new deal or for extra borrowing, rather than those moving from one lender to another?