Bizarre valuation situation

CRIMPY

Am in a strange situation - anyone have any experience of this?

We're borrowing less than 20% LTV on our property (which currently has no mortgage or other secured debt) for extension and renovation. Loan is about 1x my salary alone. No problem, right? Ah...bank takes 500 quid valuation fee and then valuation people say house is worth...ZERO. Why? Because it's full of builders who've disconnected the water and a house without running water is uninhabitable. So it can't be assigned a "current value" - who'd want to live in a house full of builders? (We're staying at friends to let them get on more quickly) However, if we bulldozed the house, it would be fine because they could lend on the land value alone. I am not making this up.

Apparently this is all our fault because we should have known (how?) not to let the builders start until the valuation guy had been. Well, if they'd turned up within a few weeks of taking our money they'd have been there in time.

But what difference does it make? Them turning up two weeks earlier would make absolutely no difference to the risk or otherwise of the loan.

Incidentally, they've provided a valuation for house after "work completed" which is fine, but won't offer a valuation for "as now" ( i.e. half way through the building works).

Bank took my money to pay for this valuation and I'm now in a bizarre situation. I speak to the bank and they say they know it's stupid, they just need the valuer to tell them what extra he needs to give an "as now" number. Literally, an empty plot would be worth more than the loan! I speak to the valuer (why I have to and not the bank is another mystery) and they blame the bank, saying they can only assign a nil value until the house is habitable, but that the bank should lend anyway and it's them that are being stupid.

Completely stuck. 500 quid out of pocket for a valuation that never actually happened (turned up and said he couldn't value it), both parties blaming the other, and builders about to down tools because I can't pay them.

Any ideas welcome!!

stator

Ask them for a refund of the valuation fee. You might get it, you might not.

Go see a mortgage broker, see what's possible. Maybe a bridging loan?

ACG

You wont get the £500 back as the valuation has been carried out.
It will be stated in their criteria that the property needs to be habitable (which includes being secure, heating and hot running water).

A bank would not normally lend against the land alone (a couple of building societies would, but not many and even then it would normally be a self build product rather than the average 2 year fix).

I understand your frustration, but the mistake lies with you. You applied to a lender where the property does not fit criteria. You and the property have to fit criteria at the time of application right through to completion - you might not agree with their rules, but it is their money you are asking for.

The surveyor and customer service rep are showing empathy, I would not read too much into it. When I worked for a bank I had to show empathy even when I never agreed with the customer.

Apologies for being straight with my answer but I prefer to be honest and then find a way to move forward.

Without knowing the state of the property at the minute, it is difficult to say whether or not you will get chance to get the funds prior to the building work being completed with a mortgage. You may find you have to fund it with loans/credit cards and then in x months once it is all completed, remortgage to pay off those debts (debt consolidation).

You need to either check with the lenders before applying/get a broker to help you with it. Making more application to different lenders will likely result in the same outcome.

CRIMPY

ACG wrote: »

You wont get the £500 back as the valuation has been carried out.
It will be stated in their criteria that the property needs to be habitable (which includes being secure, heating and hot running water).

A bank would not normally lend against the land alone (a couple of building societies would, but not many and even then it would normally be a self build product rather than the average 2 year fix).

I understand your frustration, but the mistake lies with you. You applied to a lender where the property does not fit criteria. You and the property have to fit criteria at the time of application right through to completion - you might not agree with their rules, but it is their money you are asking for.

The surveyor and customer service rep are showing empathy, I would not read too much into it. When I worked for a bank I had to show empathy even when I never agreed with the customer.

Apologies for being straight with my answer but I prefer to be honest and then find a way to move forward.

Without knowing the state of the property at the minute, it is difficult to say whether or not you will get chance to get the funds prior to the building work being completed with a mortgage. You may find you have to fund it with loans/credit cards and then in x months once it is all completed, remortgage to pay off those debts (debt consolidation).

You need to either check with the lenders before applying/get a broker to help you with it. Making more application to different lenders will likely result in the same outcome.

Hi,

As it happens, I gave the mortgage broker the full story, the proposed schedule, etc., and at no point did he warn me not to allow the work to start. He gave me no documents to review or sign, simply asked some questions and handled the application, before asking for his fee and subsequently the bank asking for theirs.

He is the professional and it was his duty to know enough to warn me if anything was going to interfere with the process.

I suggested that I was going the send the entire thing to the FCA and the advisor has not only refunded his fee, but the valuation fee I had pay the bank. To his credit, at least this broker has had the decency to admit he did not provide service to a standard one ought to expect. From the sound of your response, you would have kept the money and blamed me - exactly the attitude that gives the industry a bad name.

Still, at least I got my money back. I hope your clients would be as fortunate in the same circumstances.

Blackbeard_of_Perranporth

CRIMPY wrote: »

Hi,

As it happens, I gave the mortgage broker the full story, the proposed schedule, etc., and at no point did he warn me not to allow the work to start. He gave me no documents to review or sign, simply asked some questions and handled the application, before asking for his fee and subsequently the bank asking for theirs.

He is the professional and it was his duty to know enough to warn me if anything was going to interfere with the process.

I suggested that I was going the send the entire thing to the FCA and the advisor has not only refunded his fee, but the valuation fee I had pay the bank. To his credit, at least this broker has had the decency to admit he did not provide service to a standard one ought to expect. From the sound of your response, you would have kept the money and blamed me - exactly the attitude that gives the industry a bad name.

Still, at least I got my money back. I hope your clients would be as fortunate in the same circumstances.

Good for you!

I hope you also have an architect to oversee you project. Otherwise we will see you again as you plough your way through your mess!

somethingcorporate

CRIMPY wrote: »

Hi,

As it happens, I gave the mortgage broker the full story, the proposed schedule, etc., and at no point did he warn me not to allow the work to start. He gave me no documents to review or sign, simply asked some questions and handled the application, before asking for his fee and subsequently the bank asking for theirs.

He is the professional and it was his duty to know enough to warn me if anything was going to interfere with the process.

I suggested that I was going the send the entire thing to the FCA and the advisor has not only refunded his fee, but the valuation fee I had pay the bank. To his credit, at least this broker has had the decency to admit he did not provide service to a standard one ought to expect. From the sound of your response, you would have kept the money and blamed me - exactly the attitude that gives the industry a bad name.

Still, at least I got my money back. I hope your clients would be as fortunate in the same circumstances.

Well done, your assessment was clearly bob on that the mortgage broker should have known better.

CRIMPY

I can assure you we have professional architects.

CRIMPY

"But you should have known" is a familiar refrain from some professionals, who seem to forget that we do these kinds of transactions 3 or 4 times in a lifetime, whereas they do it daily. When you charge hundreds of pounds for advice, that advice should involve some diligence, some questions of the borrower and the raising of red flags. It's not a fee to simply do a Google search for a good rate. In this case, the advisor was fully aware of our plan and said nothing. Even if he *hadn't* been aware, it would have been good practice, based on what should be professional knowledge and experience to say "by the way, don't do any work until the valuation people have been". Had I seen a document pointing this out (I didn't in this case), yes, it would technically have been my mistake, but it would still be nice to imagine a professional pointing this out, just as a lawyer talks you through a business contract to highlight issues relevant to your circumstances.

Anyhow...as I say, this guy, to his credit, accepts that he failed to advise me properly and has covered my lost fees.

I can't say I'm thrilled at the final position, but at least he did the right thing.

Lilla_D

OP - when I read your original post, it did sound to me as well as if you had applied direct, as a good broker should have warned you and discussed the implications with you. This is why ACG said that it was your mistake not to check whether you fitted criteria and recommended that you speak to a broker to find a solution.

The fact that you did use a broker shows that your broker was at fault, not you, but ACG could not have known that, so it's not ACG giving the industry a bad name, but your broker The fact that he repaid his fee is not to his credit, it's the least he had to do to avoid an official complaint from you.

Anyway, back to your problem, it's normal that the valuation comes back at zero value when the property is full of builders and is inhabitable. Your options now indeed are limited to financing the works from credit cards, loans, family help, bridging loan, etc. and then once the works are done and the building is habitable again, try the remortgage process again. However, you might be best placed to use a different broker...

CRIMPY

Lila,

Yes, fair point on the original reply...I guess I'm just oversensitive to "it's your fault" comments after 2 weeks dealing with this, most of which feels like it was spent listening to distorted Mozart on telephone hold.

Lilla_D

Yes, I can understand your frustration. Hope you manage to find the funds for the works and then can remortgage without further hick-ups!

P.s. If you stick to the current broker and the already submitted application, then dependent on the lender, they might do a re-valuation after the works are completed for a nil or lesser amount of fee than a full valuation. Worth checking.