Valuation when remortgaging

SGE1

Our fixed rate isn't due to end for another year or so, but in the spirit of being prepared and all that, I'm thinking about the remortgaging process.

We originally borrowed 94% of the value of the property (as first time buyers in 2009 - a very high LTV thanks to a relative putting 19% of the value of the property into a linked savings account with the mortgage provider, which allowed us to access c.75% LTV interest rates).

When we come to the end of our fixed term, I think we'll probably have about 13% equity in the property - which will probably make it quite difficult to get another mortgage.

However, we've done considerable work to the property which was in a pretty poor state when we bought it - we've spent upwards of £15k so far (both structural repairs, and cosmetic improvement, inc restoring some period features), and still have a bit more to do (including putting in a new kitchen, and new bathroom). When we come to remortgaging, will this work be taken into account properly when valuing the property? Our conservative estimate (based on other for sale/sold houses on our road) is that we've added c.25k to the value of the property.

Obviously having this reflected in the mortgage valuation will massively affect the level of equity we own, and subsequently the LTV for our remortgage. Is this what will happen? How do mortgage valuations work? Will we need to show receipts for work done / show before and after pictures and things like that? We're very happy to - but from what we've been told, the valuation process is much more basic - and if they value the house simply based on what it was last sold for, without taking a look inside, then we're in trouble...

kingstreet

The new lender will send a surveyor to inspect the property. He will value it based on his agreement (or otherwise) with what you place on the form as the value you believe it holds. He will use recent sales of similar properties in the area to provide the lender with comparable evidence of value.

opinions4u

If it's a Lloyds TSB mortgage then the go to rate is probably a tracker at 2% above base rate.

Remortgaging away from that may not be a good move.

But if you want to overpay and reduce the debt this might be a good idea to improve your LTV.

kingstreet

SGE1 wrote: »

a relative putting 19% of the value of the property into a linked savings account

Marsden BS?

SGE1

kingstreet wrote: »

The new lender will send a surveyor to inspect the property. He will value it based on his agreement (or otherwise) with what you place on the form as the value you believe it holds. He will use recent sales of similar properties in the area to provide the lender with comparable evidence of value.

Thanks. So we will be asked to provide our assessment of the value of the property?

And in practice, does that mean he will consider the work done? There are lots of properties for sale/sold on our street - some in poor condition, selling for cheap, and other more expensives ones (often sold by developers). I just want reassurance that the condition of the property will be taken into account.

SGE1

kingstreet wrote: »

Marsden BS?

C&G 'Lend a hand' (or something like that)

SGE1

Can anyone else help?

SGE1

Nobody?

kingstreet

When you complete the application form for the new mortgage, it will ask you for estimated value of property. It is normal for the surveyor to consider what you've written in the light of the comparable evidence of other sales and to agree with it, if it appears reasonable.

He will look at the condition of the property and see how it compares with the comparables. A good surveyor will put some time into establishing how the conditions compared from property to property as well as the price.

Thrugelmir

The value of improvements can be very arbitary. As people spend far more on their home than a developer would to restore.

If the property still requires a new bathroom and kitchen. Two of the most important rooms in the hose. The £25k you've spent so far may count for little.

Check what interest rate your mortgage moves onto when the fixed term ends. This may be a deciding factor in whether you remortgage or not.

SGE1

Thrugelmir wrote: »

The value of improvements can be very arbitary. As people spend far more on their home than a developer would to restore.

If the property still requires a new bathroom and kitchen. Two of the most important rooms in the hose. The £25k you've spent so far may count for little.

Check what interest rate your mortgage moves onto when the fixed term ends. This may be a deciding factor in whether you remortgage or not.

Indeed. SVR is lower than the fix at the moment, but obviously that might change.

And we've spent £15k so far, not £25k. On things like new double glazed sash windows, re-wiring and the cost of materials and cost of various services (surveyor, building regs etc) - we've done pretty much all the cosmetic stuff ourselves. So while we have slaved over it and it's been done to a pretty high standard, we've not !!!!ed all our cash up the wall paying a contractor to do it all. I know everyone is proud of their home and some people (most people?) are convinced theirs is worth more than it probably is, but I think we're been pretty realistic, and we're keeping an eye on what is actually happening in the real world (i.e. what houses in a similar condition to ours are selling for - identical terraces, so easy to compare).