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House undervalued during remortgage

Hi,

I've seen a few threads about similar cases but they all seem out of date.

I bought a new build house 3 years ago for £140000, and my 3 year fixed mortgage deal ended in August. Ive been going through the process of remortgaging based on borrowing around £121K against a valuation of £139K (which i had been told by a number of poeple over the phone), so a loan-to-value of around 87%.

I got accepted for a HSBC mortgage and all was going fine until they carried out the valuation. The surveyors working for HSBC valued the house at £125000 (£14000 less than expected) which gave a ltv of 97%. This meant that i would have to find an extra £10k to progress with the mortgage to bring it to the max 90% ltv, which i havent got and dont really want to do anyway.

I challenged the valuatilon and was told that the mark down in price was due to 'new build preimum' and the local housing market. HSBC were happy with this so would not budge on their stance.

My question is what options do i have in this situation? while i understand that all surveyors are slightly different, surely they will be close enough so that anyone will give a similar valuation. And this would mean im going to struglle to get a new mortgage deal.

Is this 'new build premium' real and should it reduce the house valuation that much?

I have looked at sold properties in the area but there aren't really any similar to mine, so cant see where the surveyors have got their evidence from but they wont share it

Any advice anyone has would be greatly appreciated

Thanks

Jonathan

Comments

  • ReadingTim
    ReadingTim Posts: 4,068 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Sadly new houses have a premium just the same as new cars, and the value can drop off once they're no longer new.

    I can't comment on the actual figures, but £14k is possible, especially if there isn't anything comparable in the area. Furthermore, depending what the local market has done, that could also drag the valuation down, as you state.

    Unfortunately, it's HSBC's money, and it's up to them how much they lend - it's their commercial decision, not some "right" which you can challenge. Your choices seem to therefore be try another lender, or stick with your current lender - do you need to remortgage? It might be a better bet to revert to your current lender's standard variable rate, and make overpayments on that to reduce your LTV with a view to remortgaging in another year or so...
  • harrys_dad
    harrys_dad Posts: 1,997 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Yes, reverting to your lender's SVR seems the only way forward.
  • Do you have recent sales comparables to back up your £139k figure?
  • Bluntly, there is very little you can do.

    Try another lender, or try to raise the extra money (it makes sense, being hostage to an SVR can be a pain).
  • MobileSaver
    MobileSaver Posts: 4,334 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    jonnyhinch wrote: »
    Is this 'new build premium' real and should it reduce the house valuation that much?

    Yes and yes.

    Frankly I'm surprised that you are surprised... you must have known you were paying a premium for a brand spanking new house with brand new fixtures and fittings three years ago? Three years on and nothing in the house will be new and unused so buyers won't be prepared to pay a premium this time around.
    Every generation blames the one before...
    Mike + The Mechanics - The Living Years
  • Thanks for all the replies

    To be honest, yes i did expect a little bit of a premium, just not that much. And (maybe a little nieve) i expected the house value to improve to make up the difference 3 years on.

    I've had a look on a couple of websites and the only houses sold in my area in the last 6-12 months that are similar have been new builds, so not a good comparison. my 139K valuation was based on what id been told by a couple of brokers based on the property over the phone, and backed up by a couple of internet valuations. With hidesight, a bit more digging and research was needed up front.

    Regarding the SVR - yes we can stick with that ( its pretty much the same as our fixed rate that just expired) it was just the fixed rate offers around at the moment would save a chunk of money each month.

    If i was to apply for a new fixed rate with my current lender, should i expect them to also do a valuation? If i do apply for a better deal and they undervalue it, could they pull out of the SVR im currently on? My concern is that i may end up with no option but to find the extra cash just to keep the house?

    Will there be that much variation between lenders and surveyors? after this im a bit reluctant to to keep paying for valuations with different lenders just for them to say the same thing

    Thanks again
  • harrys_dad
    harrys_dad Posts: 1,997 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    I don't think any lender will take you off their SVR just because the house value has dipped. if they did something like a million people would get foreclosed overnight. Not sure what you have to lose by asking them for a new fixed rate, but remember those deals come with an arrangement fee.
  • pinkteapot
    pinkteapot Posts: 8,044 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    If you apply for a remortgage with your current lender, they will do a valuation.

    BUT, it will in no way impact on your current mortgage. When you applied for that mortgage three years ago, they agreed to give you a loan over 25 years (or whatever term you applied for). They can't simply turn round now and say "sorry, we've changed our mind, we want our money back". So no, you can't lose your SVR deal. :)
  • kingstreet
    kingstreet Posts: 39,206 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Ask your current lender about "customer retention" products which may be available to you. Most lenders do not take the property value into account when offering such deals.

    If they don't have anything to offer you, or they are not very attractive, you will be able to remain on SVR with no problem.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • Our house was also revalued downwards from our purchase price. The guy who came round didn't have a clue about our type of property (listed farm house) and just wanted to know when we bought it and how much for. As our house included farmland, it isn't listed on the standard land registry 'sold house price' sites, so he couldn't look it up. I wish I hadn't told him because all he did was go away and calculate how much the average house price had dropped since we bought and took that figure away from our purchase price.

    No matter that we had converted a stable into a one bed apartment since we bought the house and have caried out other renovations. It was laughable really. Luckily I was expecting it and made some overpayments to keep us in the highest LTV banding, so we got the mortgage we wanted.

    They are a joke though, the valuers. You wonder if they just have an A-level in 'mouseprice searches and basic arthmetic'.
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