Shared Ownership Valuation

xnemesis

Hi all

I’ve searched through the MANY posts on this but couldn’t find my answer. Sorry if I’ve missed it!

We’re looking at staircasing to 100%. I’ve just received my RICS valuation using a surveyor recommended by the HA. This valuation has come in much lower than expected. Given that next door sold for this price 10 weeks ago and is 70-75% the size (and a few not quite correct assumptions around lease, etc) I think I’d have grounds to challenge it. But should I?

If I remortgage for 100% will the mortgage company use this valuation or will they conduct their own? I appreciate the price I pay would be based on the RICS valuation. But If the mortgage provider conduct their own, I imagine the value will be higher and drop my LTV, which is a good thing. Else I will look at challenging it as it puts my LTV above 90% which means higher interest, less lenders to choose from, etc.

All help appreciated

xnemesis

Sorry to nudge. Wondered if anyone was able to help?

Lunchbox

Ultimately, if you’re buying more shares, surely you want the valuation to be lower so you’re paying less? The mortgage valuation, although they do their own will be based on the price you are purchasing at; it’ll come in at that price or lower, not higher.

Thrugelmir

Lower the valuation. The less you'll pay.

Webxite

Mortgage company won't value it higher. We had a similar situation on staircasing and the valuation from the mortgage company simply said it was worth asking price or more but didn't put a figure on it. So if there are going to be LTV issues it could be worth challenging the valuation. However you'll need to weigh up whether paying less for the remaining share is going to save you more money than the mortgage rate. On balance we were glad our RICS surveyors gave low valuations.

Tom99

Can you explain how paying a higher purchase price is going to help you?

xnemesis

Hi all

Thanks for the replies.

I currently only 40%, which I purchased for £104,000 about 4 years ago. I have an outstanding mortgage of £87,500. (Full property value £260,000)

My DP and I are wanting to buy the whole place and have now had a valuation for £235,000. Great, shares are less. However, we only have £10-12.5k to put down, which means at this reduced price, our LTV will be above 90%, excluding us from our current lender and meaning higher interest rates.

My thoughts about appealing the valuation are based on next door sold for £235,000 10 weeks ago. Their property is 44m2 with a 2.5m2 balcony. Mine is 55m2 with a 6m2 balcony. Property prices in the area have been stable and have increased slightly in 4 years. There was lots of comparison against properties that are 44-46m2, stating that there is a long hallway in my property so they've discounted 6m2. Bearing in mind, all these other properties will also have hallways (granted not as large), but they've discounted the entire hallway, which has storage, etc so not truely wasted. Given that the flat is larger and has had improvements made inside, and next door has not, it does (to me) see unfair to value it at the same price. However, to reduce the LTV to 90% or lower, it would need to be valued at £255,000. There are similar properties close by on the market for around £280-300k.

What are your thoughts? I obviously don't want to appeal and cost myself more money, but the difference in mortgage rates would make a reasonable difference on monthly payments, interest, etc.

My other question was if the mortgage lender valued the property at say £260k and I have a RICS survey valuing it at £235k, what would happen? I obviously would buy at the value from the survey, but would they work out the LTV on their valuation? Or would they simply not do one as I have a more detailed valuation?

Thanks!

ethank

The mortgage will be issued on the valuation of the RICS survey or the mortgage valuation, whichever the lower.

Tom99

xnemesis wrote: »

Hi all

Thanks for the replies.

I currently only 40%, which I purchased for £104,000 about 4 years ago. I have an outstanding mortgage of £87,500. (Full property value £260,000)

My DP and I are wanting to buy the whole place and have now had a valuation for £235,000. Great, shares are less. However, we only have £10-12.5k to put down, which means at this reduced price, our LTV will be above 90%, excluding us from our current lender and meaning higher interest rates.

My thoughts about appealing the valuation are based on next door sold for £235,000 10 weeks ago. Their property is 44m2 with a 2.5m2 balcony. Mine is 55m2 with a 6m2 balcony. Property prices in the area have been stable and have increased slightly in 4 years. There was lots of comparison against properties that are 44-46m2, stating that there is a long hallway in my property so they've discounted 6m2. Bearing in mind, all these other properties will also have hallways (granted not as large), but they've discounted the entire hallway, which has storage, etc so not truly wasted. Given that the flat is larger and has had improvements made inside, and next door has not, it does (to me) see unfair to value it at the same price. However, to reduce the LTV to 90% or lower, it would need to be valued at £255,000. There are similar properties close by on the market for around £280-300k.

What are your thoughts? I obviously don't want to appeal and cost myself more money, but the difference in mortgage rates would make a reasonable difference on monthly payments, interest, etc.

My other question was if the mortgage lender valued the property at say £260k and I have a RICS survey valuing it at £235k, what would happen? I obviously would buy at the value from the survey, but would they work out the LTV on their valuation? Or would they simply not do one as I have a more detailed valuation?

Thanks!

What rate of interest are you going to get which is going to make paying an extra £15,000 plus the interest on £15,000 worthwhile? You are probably looking at a 1.5%pa difference in the two interest rates over a 5yr fix just to break even.

Crashy_Time

Tom99 wrote: »

Can you explain how paying a higher purchase price is going to help you?

Good question.