Mortgage Lender Rebuild Value?

Olivia93

My partner and I are in the process of buying our first home - an end of terrace 3 bed (built around 1908) - and are planning on having a buildings survey completed due to the age of the property. This does not include a property valuation, but can be added for a further £100. If we need to get this so we can value it for the buildings insurance, we will do so but our mortgage offer (Santander) has an estimated rebuild cost of £177,000. 

Is this mortgage lender estimated rebuild cost likely to be reliable, or should we ask the surveyor to carry out a valuation as well? 

davidmcn

Are you confusing the property valuation (i.e. the market value of the property) with the rebuild cost (which is only useful for insurance purposes)? I wouldn't pay extra for a second opinion about the rebuild cost, if that's what you're asking.

SameOldRoundabout

I wouldn’t pay extra for it either! When you get your buildings insurance quotes they will have an estimate on it (and I’d be very surprised if £177k was your rebuild cost, you’d have to hold up/sort out the neighbouring building too so it’ll be higher than that. I think the £177k is more likely to be the valuation?) and factor that into the policies they show you. Ours is also Edwardian end of terrace and the insurance rebuild estimate was £560,000, or around twice purchase price. 

Olivia93

davidmcn said:

Are you confusing the property valuation (i.e. the market value of the property) with the rebuild cost (which is only useful for insurance purposes)? I wouldn't pay extra for a second opinion about the rebuild cost, if that's what you're asking.

The property valuation has come back as exactly our accepted offer, which is part of what is making me think that it might not be a very detailed valuation (the first we were aware of it was in the mortgage offer, so I don't know any details of it but I was of the impression these usually came back as lower than the purchase price).

We are looking for the rebuild cost as we will obviously want to take out insurance soon, so I am more asking if a mortgage valuation survey is likely to have given an accurate rebuild cost or a generic one for a 3 bed end of terrace? 

Olivia93

SameOldRoundabout said:

I wouldn’t pay extra for it either! When you get your buildings insurance quotes they will have an estimate on it (and I’d be very surprised if £177k was your rebuild cost, you’d have to hold up/sort out the neighbouring building too so it’ll be higher than that. I think the £177k is more likely to be the valuation?) and factor that into the policies they show you. Ours is also Edwardian end of terrace and the insurance rebuild estimate was £560,000, or around twice purchase price. 

Okay, this is interesting - the purchase price is £405,750, which they have said is the valuation price, it is definitely the rebuild they have quoted as £177k. So although I don't want to pay twice, this is making me more sceptical of the lender estimation! I don't want to pay twice (though we weren't charged for the lender valuation), but if it sounds like it might be very wrong. I may call a couple of insurance companies and see what they say. 

davidmcn

Olivia93 said:

davidmcn said:

Are you confusing the property valuation (i.e. the market value of the property) with the rebuild cost (which is only useful for insurance purposes)? I wouldn't pay extra for a second opinion about the rebuild cost, if that's what you're asking.

We are looking for the rebuild cost as we will obviously want to take out insurance soon, so I am more asking if a mortgage valuation survey is likely to have given an accurate rebuild cost or a generic one for a 3 bed end of terrace? 

Many insurers aren't even interested in a specific amount of cover these days, they'll just cover whatever it costs to rebuild your type of house in your area. Whatever your lender is asking you to cover for is likely to be a good enough estimate to work with.