What are my options - lower than expected RICS valuation

MiseryChastain

I recently had the RICS valuation for the purposes of staircasing a help to buy loan (stair casing from 30 to 10% of the property value, London HTB).

The valuation came out much lower than I’d expected. Let’s say the original property price was X, the valuation revealed that the property price had dropped by 7.2% (e.g. 500,000 to 464,000).

Admittedly, this was a new build, and I fully expected there to have been a new build premium when I purchased. However, I am now extremely concerned by the drop and that it is quite significant.

I am aware that staircasing then HTB from 30 to 10 per cent at this time is advantageous is the price has dropped. However:

1. should I continue overpayments on my mortgage (currently overpay each month by £500) in these circumstances?

2. My current fixed term mortgage comes to an end in October. Will then drop in the property’s value affect my remortgage options?

3. I plan to pay off the final 10% next year and expect prices to have stagnated for then next year. Once then HTB is fully paid off, should I keep the property and rent it out in the hope that prices eventually start to rise again? I don’t want to sell the property in the next few years due to the drop in then price and the general dire state of then market, but equally I don’t necessarily want to be living here in the next few years as I may move in with my partner (flat’s too small for both of us).

Sorry for the questions and please go easy but I was just very shocked by the valuation and now panicking about options.

Thanks

MC

tlc678910

Hi,
If the valuer knew it was a valuation for help to buy staircasing they have probably tried to give you the lowest fair valuation that they could in order to save you money so I wouldn't worry too much.

I can't see it affecting a remortgage as you won't share it with any body else. If you are choosing a new deal with the current provider (without a full remortgage) they won't do a new valuation - they may take account of how much you have paid (new loan to value) or adjust according to their own local area metrics. If you want to know if prices really have fallen look at local sold prices.
Tlc

AdrianC

MiseryChastain wrote: »

I recently had the RICS valuation for the purposes of staircasing a help to buy loan (stair casing from 30 to 10% of the property value, London HTB).

Do you mean from 10% to 30%, from 30% to 100%, or some other increase?

The valuation came out much lower than I’d expected. Let’s say the original property price was X, the valuation revealed that the property price had dropped by 7.2% (e.g. 500,000 to 464,000).
...
1. should I continue overpayments on my mortgage (currently overpay each month by £500) in these circumstances?

I can't see any reason why not. You still owe the same money to the lender. You're still paying the same interest on the money you owe.

2. My current fixed term mortgage comes to an end in October. Will then drop in the property’s value affect my remortgage options?

Depends on your LtV. If you're staircasing, I presume you're remortgaging to borrow the additional anyway.

Any given borrowing's LtV at £500k value is going to be a higher LtV at £464k value. 50% LtV at £500k is £250k which would be ~54% at £464k. If that pushes you into a higher risk category for any given lender, then you'll be looking at a higher interest rate - or no loan, if you're close to affordability or their max LtV.

Tom99

You are increasing your ownership at a lower price than you thought. What is not to like about that? You made the right decision only buying 30% at the 'new value' higher price.

Crashy_Time

Could have been worse.