Re-mortgage for Extension - House Value.

Dawz84

Hi Guys,

Wonder if someone can point me in the right direction. Looking to re-mortgage for some extension work I'd like to have done. The problem I'm having is to do with the house valuation. Obviously available funds has drastic effect on the work which can be carried out. Which isn't an issue if I can get as much as I'd like. If not I'd need a Plan B, something cheaper.

I contacted the RICS Surveyor who originally did our homebuyers report many years ago. Turns out he's since retired but advised to use the Nationwide national price index. Anyone know how this compares with the valuation a bank would do? 

I need a way I can find out now what the banks will value my property at so that I can plan accordingly? 

Regards

K_S

@dawz84 You could check comparables for recent sales of similar properties in a reasonable radius. If there are none then apply the Nationwide house price index calculator on their website. Or get a couple of valuations from EAs. Once you have a ballpark estimate, apply a bit of optimistic uplift and use that with your application.

Most remo products with come with free valuations and the valuation will happen early on in the process. Once you have a valuation, you know how much you can get and then tweak plans if needed.

Dawz84

Could almost do with a valuation for a fee to lock in the valuation, like getting a quote 
I looked on Zoopla but there's a 20k different between there range. Although the Nationwide index aligns itself with the higher figure. My worry is if they value it at the lower end. 

Do you think if I'm applying to re-mortgage for home improvements and I'm requesting a certain amount, there likely too match due to the likely uplift in value from works to be carried out?  

K_S

@dawz84 From experience, spending X on an extension rarely results in an immediate uplift of a similar amount. In any case, for a remo the lender will value it as it is presently.

It's not an exact science unfortunately. I recently did a BTL remo with capital raise (she wanted to raise as much as she could for a further BTL purchase) for a client who came to me with a value of 250k from Zoopla. I saw that the last sale on the street for a similar house was 240k from 2 years ago so added a bit of optimism and put 270k on the application. The valuation came through at that value and meant that the client could borrow an extra 20k or so at a very good rate for her onward purchase. That's the approach I take usually for valuation estimates to use in remo applications.

Dawz84

Thanks that's interesting.
Zoopla estimates from 178k-197k.  The National price index estimates at 203k. A similar house sold on the street in 2019 for 200k.

I'm thinking now there likely to match the 200kish estimate. Could I put higher on the application, but then ask for a reduction if they accept the valuation getting a better LTV? Is it simple to reduce the application figure? 

Thrugelmir

Look at sold prices on Rightmove in your locality. Not just the street you live in. Should be adequate to estimate a value. 

K_S

@dawz84 Yes, making an amendment to reduce the borrowing figure downwards is usually a straightforward task, at least as a broker.