Valuations for re-mortgage and how to approach

twin_40s2000

Hello peoples - long time lurker but never registered - the forum has been a great help so far. But I need a bit of sound advice on a re-mortgage if thats ok please?

I'm about to re-mortgage out of a fixed rate and the lender I have applied to has to send a valuer out. I am twitchy on the valuation I have given the lender now of £180k -

I have looked on mouseprice and zoopla the the value is around £170k estimate on both sites, there is a house in my road for sale at £185k. Last sales of a similar house went at £168k in 2011, £172k in 2008 and £178k in 2010. Mine has a fairly large conservatory that the others do not have and is in a good state of repar and has recently been updated with a new kitchen and bathroom. I based my valuation on the other for sale house really at £185k... Plus my last valuation in 2007 for a re-mortgage was £180k.

So is my £180k sensible or is the valuer likely to go lower? I am a borderline LTV on the mortgage so may have to stump the difference or go a higher LTV. I could re-apply onto the higher LTV straight away and be safe / confident I'll hit that rate, or do I risk it and see what happens?

Advice appreciated, thx.

Rafter

Presumably you have already paid a non-refundable booking fee and the valuation charge?

So you might as well wait and see. If the lender you have selected has a higher LTV product I would expect them to offer you that if you don't qualify due to a valuation issue.

Remember that houses are generally selling for about 92% of asking price so £170k does sound more reasonable.

You just need to do your sums as to whether paying lower interest but having to raise a larger deposit is better for you than going for a higher loan to value loan.

Good luck.

R.

MDL74

Sorry to hijack but i am in a similarish situation

We bought the house for £300k 2 years ago, it was advertised originally at £360k and then at £330k at which point we offered £300k which was accepted. As the house hadn't been touched in over 30 years, we then spent £50k improving it.

When valuing the house for remortgage purposes, would i be best advised at valuing at around £330k or should i value it at the full £350k which is what i paid for it plus what i've spent (i appreciate that house prices have reduced somewhat but we've hopefully added a lot of value in what we've spent)

Thanks for any suggestions and apologies to OP!

Dave_Ham

Hopefully an answer to both questions:

A surveyor will never go out and value your house at more than you have put on the valuation application forms.

They are being more and more conservative, so do have your plan B ready. If you are tight on LTV, then ensure the lender is suitably priced at this banding also. No point in applying to a lender when tight at 75% if their 80% product is way off the mark.

Remember, they always look at sold prices and for sale prices mean absolutely nothing. I could put my house up tomorrow for £1,000,0000 but that does not mean it is worth it, nor should my neighbour think they can remortgage on a £900k valuation as mine is slightly bigger.

Always seek to get a remortgage package where the valuation is free as therefore you will be minimising your outlay but do be realistic with your valuation.

The banks/surveyors can also see what you paid for the property and when and what has happened on houses within your post code/geographic area.

Do not be afraid to politely tell the surveyor why you have valued your house at what you did and give details. Try not to make it a sales pitch, but if number 82 went for £285k and yours has a conservatory and garden twice as big then it is no harm to tell him/her.

It is a volatile area at the moment, good luck

MDL74

Thanks although I'm not sure I phrased my question right.

If they look at sold prices only then they don't take into account condition of the house when it was sold??
Eg if I buy a house at a bargain price because it needs a full refurbishment and then x amount is spent on the refurbishment then would the valuation of the property take into account the current state of the property s the previous state?
Otherwise the houses that are sold cheaply because of poor condition would then drive down the prices of similar houses that have been well maintained... or is this a well known factor for the reason behind falling house prices??

Dave_Ham

Ultimately the true value of a house is the amount someone is willing to pay.

Your situation is true to a degree, if a house has been run down and in a bad state of disrepair it is worth less to a buyer but the actual "value" of the house to the bank does not hugely alter.

When using comparables, which they heavily use nowadays it allows the bank to value the property based upon it not being looked after and hence the conservative approach.

Do not get me wrong, if there is a loft conversion, extension or conservatory this will increase the "valuation" although if the walls are repainted and the carpet is a decent looking addition it is unlikely to increase the valuation.

The surveyor can only value the property at worth now and best guide for them is nearby property house prices and the style, decor, condition will be factored in.

Just because your house was originally marketed at £360k (I think) and you got for £300k, who is to say it is not worth £280k?? I am not saying this is the case, just food for thought.

I take clients realistic remortgage property valuations, although more and more they are coming back down-valued - specifically when certain high profile national surveyor companies are used!!

Good luck

twin_40s2000

Thanks Daveham that is very usefull info - I've opted for a fee free product and am hoping I get the 70% LTV I am after, however my plan B is to run on the 80% product if the valuation is under, and at present the interest rate if you pay the fees is the same as the fee free 70% product. I could have gone straight for the 80% product but am nervous about stumping the fees in case it goes horribly wrong (they are non-refundable). Going fee free is giving me some comfort!

When you said the valuer will never value your property more than you state, does this mean the bank tells them what you suggest? I thought they didnt disclose this information?

Dave_Ham

twin_40s2000 wrote: »

Thanks Daveham that is very usefull info - I've opted for a fee free product and am hoping I get the 70% LTV I am after, however my plan B is to run on the 80% product if the valuation is under, and at present the interest rate if you pay the fees is the same as the fee free 70% product. I could have gone straight for the 80% product but am nervous about stumping the fees in case it goes horribly wrong (they are non-refundable). Going fee free is giving me some comfort!

When you said the valuer will never value your property more than you state, does this mean the bank tells them what you suggest? I thought they didnt disclose this information?

You should not really be paying arrangement fees etc. until the mortgage is agreed. What have you paid out for?

My experience is that they always tell the surveyor, although there are always oddities so happy to be corrected if someone knows different..

harvey115

When the survey is instructed by the Bank, they disclose the price you put in in your mortgage application. It is in support of the Bank to make sure they have good enough security against their money.

So to be conservative the surveyor would just say the words that the price is right for the Bank's security, if not undervalued.

twin_40s2000

I'm on a fee fee product so haven't paid anything and won't be. I am expecting the valuation to be spot on or under, if under it tips me into the next LTV bracket. So the lender has said they will offer me an 80% product, and if I pay the fee I have the option to take the lower interest rate product at 80% LTV (which in fact is the same rate as the 70% fee free product). Does this make sense? They do take valuation fees up front, so by going on the fee free product I have taken any cost element out until I know the result of the survey...

Based on them telling the valuer my estimate, perhaps I should have inflated this some what just in case! I know the value is the value, but if I have under estimated (which I dont think I have but some people may do) then you kind of shoot yourself in the foot!

Dave_Ham

I got it - fingers crossed for you and do let us know how you get on....