House undervalued on Remortgage, should I put the extra money in?

boxrick

I am currently coming to the end of a 2 year fixed mortgage and was looking to remortgage. Myself and my partner are in a much better position than when we took out original mortgage and are both employed on a permanent basis.

If I was to simply redo our mortgage paying no extra money we could bring it down to 15 years. However I like the idea of getting rid of my mortgage early and paying things off. So I applied for Skipton Buildings Society 4.49% 10 year fixed rate on a 75% LTV and we decided to increase our monthly payments to be mortgage free in 10 years, this also involved me paying an additional 4k into the mortgage to bring the LTV value down.

The issue lies in our valuation. We purchased the property in late 2010 and got a 2 bedroom detached house for 95k which is one of the few detached houses in the area most are semis or terraced. We have been making ongoing improvements so just recently had our electrics updates to a 17th gen board and had a brand new boiler and Central heating system and replaced all the radiators. We are also currently in the process of doing up our living room and it is stripped totally bare but obviously work in progress.

We had a surveyor round recently and he valued our house at 87.5k which is obviously a fair old chunk less...

Simply put how should I handle this? I can just about scrape together the required funds which would involve me paying an extra 10k into my house but would mean we are short of money for the coming months. I have been working 7 days a week for the past 8 months to save up for this remortgage and now this has happened I am gutted... I am really tempted to just put in the extra money and 'make do' for a few months and continue to work the 7 days till the end of the year.

Any opinions or advice would be greatly appreciated!

opinions4u

What makes you think the valuation is wrong?

The improvements made are exactly the sort of things that add little to nothing to the value.

Unless you have evidence that the valuer has made a mistake then you are stuck with it.

So the decision then falls on you over what to do. Perhaps seeing a broker and seeking out a deal with an alternative lender is the way forwards. A five year fix with overpayments may do the required job,

TrickyDicky101

I am confused why you wish to fix for such a lengthy term - given your relatively short repayment horizon, you will be making substantial capital repayments with each month's mortgage payment so changing interest rates (eg if on a tracker or SVR product) will have relatively smaller impact on you than if you were on a standard 25 year term.

Retaining flexibility by not having a fixed term of such length would have its advantages for instance in case your circumstances change and you need to reduce your payments for a period of time.

getmore4less

Whats the followon rate on your current deal?

boxrick

opinions4u wrote: »

What makes you think the valuation is wrong?

The improvements made are exactly the sort of things that add little to nothing to the value.

Unless you have evidence that the valuer has made a mistake then you are stuck with it.

So the decision then falls on you over what to do. Perhaps seeing a broker and seeking out a deal with an alternative lender is the way forwards. A five year fix with overpayments may do the required job,

I didn't think the valuation was wrong just on the "low" end of the scale....

87.5k for a detached officially 2 but 3 bedroom house with a landing pad and a small garden. Cannot see how that seems right...

Semi detached houses in worse condition just a mile down the road go for 100k+ and they are in a no nicer area. :rotfl:

TrickyDicky101 wrote: »

I am confused why you wish to fix for such a lengthy term - given your relatively short repayment horizon, you will be making substantial capital repayments with each month's mortgage payment so changing interest rates (eg if on a tracker or SVR product) will have relatively smaller impact on you than if you were on a standard 25 year term.

Retaining flexibility by not having a fixed term of such length would have its advantages for instance in case your circumstances change and you need to reduce your payments for a period of time.

I wish to fix for such a lengthy time simply for security. I do not wish for the hassle or worry that interest will rise ( which it eventually will do ). Fixing it for 10 years at a decent rate then at the end of the term being mortgage free is at 35 seems like a good plan of action. I appreciate I will not have massive flexibility if my circumstances change *however* myself and my partner work and could both afford to live off one of a single one of our wages.

getmore4less wrote: »

Whats the followon rate on your current deal?

Follow on rate is around what I am paying at the moment ~ 5.0%.... Not great, but I never intended to stick on this mortgage. It was a first time purchase and a way of getting the house purchased and onto the property ladder and building up a credit history.

I have just been accepted for the 10 year fix under this lower valuation... I will scrape the money together and put everything into it. A bit of short term pain should be much better in the long run. Unless someone strongly advices against this ?