Should I challenge my mortgage lender's valuation?

Legacy_user

I'm new to this forum, so please forgive any mistakes on my part or the absence of acronyms.

My fixed term mortgage is due to expire in September 2020 and I'll be looking to take out another fix (probably for 5 years, but maybe 10 years depending on circumstances closer to the time). When I bought my flat (2 bed, 1 bath) I was single and on a short fixed-term contract so my options were incredibly limited, despite a perfect credit score. Fast-forward a few years, I've never missed a payment on my mortgage and have overpaid at various times too, and I have no other financial issues/debt etc. so I assume my credit score is still robust.

Last year, I spent almost £18k refurbishing the bathroom and putting in a second bathroom so I now have a 2 bed, 2 bath flat, which is both highly-desirable and rare in the area I live so there are no immediately comparable properties (which I gather is how computer-based valuations are derived). Given the value I know this has added to my property, I will be well within the < 60% LTV range when I come to remortgage, but my lender has historically indicated that the rise in my property value has been marginal each time I've remortgaged with them. "Go somewhere else!" I hear you cry. Not so easy, as I have been unable to work for the past 15 months due to illness/disability so I have no proof of income. My rainy-day savings ran out after 10 months and I've been renting out both bedrooms since to keep paying the bills (and obviously forgot to mention any of this to my lender, ahem).

Sorry for the ramble, but to get to my point: Can I challenge my lender's valuation WITHOUT triggering a full re-assessment of my circumstances? I think I already know the answer is "No" but I wanted to double-check with the wise minds on here before I resign myself to signing up to their inevitably extortionate rate, which fully benefits them, and fully ignores the true value of my home. Maybe I should have continued to suffer the mouldy, leaky, peeling bathroom I had and just knocked the £18k off my mortgage instead...

davidmcn

If there are no comparables how do you "know" what value you've actually added?

System

Even if I only added 50p value for every £1 I spent on the refurb, I'd still be within the < 60% LTV and that's based on the lender's valuation from last time I remortgaged (i.e. assumes no growth in property market despite the fact I live on the south coast).

davidmcn

There's not necessarily any relationship between the amount you spend and what (if any) value you add to the property. You need to use comparables, otherwise you don't know that there is actually anybody buying in your area who will pay more for e.g. a second bathroom.

System

Thanks, that's helpful to know. So do you think I should challenge my lender's valuation or not?

[Deleted User]

How much does it cost to revalue? (if anything)

How much cheaper is the mortgsge you want against the one they will give just now?

Brodiebobs

As far as i know the desktop valuations just use general increases in the area, applied to the price you paid. So wont take into account 'work' unless you had someone round.

After extensive works despite lending us the extra money to complete the renovations our provider wouldn't send anyone round to see them and would only rely on desktop valuation.

Therefore we moved provider and requested a visit which reduced our LTV from 82% to under 65% with a massive saving on rates.

Unfortunately the situation your in if you cant move lender you might be stuck with what they offer.

[Deleted User]

Most lenders will offer some sort of reval service for product transfers. I know for example that natwest will do a free physical valuation if you don't agree.
Halifax was alwsya a £70 charge for a reval but not sure if that's still the case.

foxy-stoat

When I challenged my Halifax valuation they wanted £350 for a new one by an independent surveyor and if that came back lower, tough.

I think the OP is on a sticky wicket as they have no income and spent far too much on this property to make it worth while.

Keep renting the rooms and take whatever offer they give you without a full application, as you would almost certainly fail it and they may just keep you on the SVR until your income improves.

System

Thanks everyone for your comments.

If only it would be cheaper. No, it looks like, as per last time, when I remortgage my monthly payment will go up again. Last time it went up just over £5 per month, which was manageable; based on current rates, it looks like a five-year fix is going to put me up at least £60 per month, which I can't afford as it stands.

I'm wondering if I should apply for disability benefits (PIP etc.) to help with the costs, but I've heard it's a tortuous process and I'm honestly too unwell at the moment to face anything like that.

[Deleted User]

Where are you living at moment if you are renting out both bedrooms?

If you are elsewhere do you have the capacity to chnage it to a buy to let and go to interest only?