Equity Release, property valuation.

SirFreddy

We are looking into a Drawdown Equity Release on our detached home and in spite of talking over the phone with an advisor I am unsure how the property valuation affects the ER/Drawdown.

Firstly, does the valuation affect the amount of Equity Release plus Drawdown, so if the valuer says an house is worth £350,000 your Release can be £65,000 plus £10,000 Drawdown amount available, whereby if the property is valued at £375,000 will the ER and Drawdown be higher?  The waters are muddied somewhat by the valuation being completed for Equity Release purposes and may not match an Esate Agents valuation.

I fully understand that precise amounts depend on Interest rates and ages of the applicants.

Finally, as a ball park figure what would a valuation/survey for Equity Release purposes cost, around £500?

acardus10

It depends on the equity release provider. If the property is valued higher then some lenders will automatically increase the drawdown pot; however, with some providers you have to ask for the reserve facility to be increased if the valuation comes back higher. Please be aware that if the property comes back valued lower, then you will have fewer funds available in the drawdown pot. Your advisor should discuss the valuation results with you and any changes you want to make to the offer following the results.
In my experience, equity release valuations do come back lower than estate agents valuations as estate agents often want the business to sell the property and will value it at a higher price to try and get you to sell with them.
Majority of equity release providers will offer a free property valuation. 
Does that answer your queries?

Whispers2Myself

SirFreddy said:

We are looking into a Drawdown Equity Release on our detached home and in spite of talking over the phone with an advisor I am unsure how the property valuation affects the ER/Drawdown.

Firstly, does the valuation affect the amount of Equity Release plus Drawdown, so if the valuer says an house is worth £350,000 your Release can be £65,000 plus £10,000 Drawdown amount available, whereby if the property is valued at £375,000 will the ER and Drawdown be higher?  The waters are muddied somewhat by the valuation being completed for Equity Release purposes and may not match an Esate Agents valuation.

I fully understand that precise amounts depend on Interest rates and ages of the applicants.

Finally, as a ball park figure what would a valuation/survey for Equity Release purposes cost, around £500?

Each equity release product offers a maximum LTV (loan-to-value) which is a percentage of your property value.  This increases with age and may be enhanced due to certain medical or lifestyle factors being relevant to you.  So,  the higher the property value the more you could release.

Some plans offer the ability to take an initial loan with a drawdown amount (held on reserve with the lender).  It is the total percentage available that will increase with a higher property value.

Properties are valued based on recent sold prices on equivalent properties in your immediate area - so may not tally with what an estate agent tells you.  This is usually evidenced by the sold prices of three houses that have sold within the closest distance to your house and in the most recent time-frame of an equivalent build type, style, upkeep, etc.

Many surveys are provided within the overall cost of the plan (the interest rate) so there is no survey fee to pay.  If you do pay a survey fee, typically it is from around £190 non-refundable on application.