Help with borrowing more - Nationwide existing customer

T-Sil

Hi All,

We are looking to borrow 75k for an extension to our house with nationwide. We have to apply direct, otherwise we would use our independent broker who has helped us before, so that's why I have a few questions!

I spoke to a local agent who told me our house is worth 450-460k. Outstanding mortgage is 300k so current LTV 66%.

I called nationwide & they told me their house price index says our house is worth 401k but that they would accept our valuation for the purpose of telling us how much we could borrow.

Anyway I have now applied online for a DIP and I used 450k as current valuation. It also asked me what the house would be worth after the work, so I added the 75k on and said £525k - which I don't think is unrealistic (I study our area quite a lot), although I don't really know...
Got to the end of the DIP, all approved but it said our LTV would be 71%, so they have obviously used the 525k valuation that I put in! It wasn't very clear they would use this...

So I am now wondering if I proceed with the full application, are nationwide likely to undervalue our house?

I am not sure what else I could have done but I don't want to waste a load of time...

Anyone have any ideas?

Thank you ever so much!

Thrugelmir

T-Sil wrote: »

So I am now wondering if I proceed with the full application, are nationwide likely to undervalue our house?

NW will more than likely obtain a surveyors valuation. As at £450k as is, your LTV is around 83%. The LTV will have a bearing on the rate offered.

T-Sil

Thanks for replying

I just never expected them to use valuation after work done?

Does anyone know if it's normal for their index to be lower than market values?

Also, if they do a valuation and we have to start again with a different product, would we then have to pay twice for the valuation??

Thanks!

T-Sil

Anyone?

ExpertAdvice

Hi

They will most likely not use the value of the house after the work is done for several reasons: -

1. They don't know what kind of work you will be doing?

2. Will you be carrying it out as per the planning permission? if not, then it might even reduce the value of the property.

3. What if you don't carry out the the work at all and just borrow the money? That way you might borrow close to 100%?

I'm not suggesting that you will not carry out the work or not carry it out as per the planning permission but just giving you lender's point of view.

T-Sil

I know, i totally agree with you! That's why I was confused that they have worked out our LTV at 71% which is based on the value after the work. They then went on to show all the mortgage products available at that percentage so that's why I am totally confused!!

Thrugelmir

T-Sil wrote: »

Does anyone know if it's normal for their index to be lower than market values?

An index would err on the side of caution for obvious reasons.