Valuing house for new remortgage

jatwap

...a bit of a mortgage-newbie here and I dumb !!! question I suspect but here goes anyway (hope you can help!);

My fixed rate is ending at the end of this month so I'm looking for a new mortgage. One thing I wasn't sure about was whether, when looking for a new mortgage, the valuation of my home ought to be based upon the price I paid for it 2 years ago or whether I could estimate the value of my home to be a little more?

The reason I ask is that I paid £165,000 for my home two years ago and I'm looking to remortgage to the value of £151,000 (91%) and it would be helpful to me in securing a better mortgage rate if I were able to value my home now at £168,000 to allow me to capture the <90% borrowing mortgage rates out there!

So, am I able to do this / should I do this / how does a new mortgage lender work out the value of my property?

Thanks in advance for any help.

TonyMMM

Any new lender will require an independent valuation to base their LTV calculation on - what you think/hope it's worth or what you paid for it 2 years ago is not really relevant (sorry)

jatwap

...and so, is it normally the home owner who is required to arrange for an independent valuation prior to speaking to mortgage providers about a mortgage? (or is this normally done by the mortgage company?) - sorry, I am new to this!

Dick_here

TonyMMM wrote: »

Any new lender will require an independent valuation to base their LTV calculation on - what you think/hope it's worth or what you paid for it 2 years ago is not really relevant (sorry)

But even when you're just getting a quote from them, never mind actually applying, they'll want to know what the property is worth in relation to how much you want to borrow. How do you get this information, educated guesswork or get an estate agent or two round under false pretences ?

dexters_mum_2

You can look on a property prices website which will give you an indicator of what houses are selling for around your area.

You won't be able to increase/decrease your valuation, the value the mortgage lender will look at is the value put on by the surveyor, he/she may put two values on, one for remortgage purposes and one for sale purposes (so the lender could see they would be able to cost cover if repossessed), I know we remortgaged last year at 85% LTV and got quite a good rate and the surveyor was asked to put these two values on but this isn't the case with every lender.

Certainly you can estimate the value of your house at £168k but remember it won't be you who puts the official valuation on it and then it is up to the lender whether they will lend on the amount you wish to borrow.

Not sure how many lenders are going over the 90% LTV rate at the moment, 2 friends of ours have remortgaged recent and were told their propestive new mortgage company would only lend 80% and 85%.

DM

lwcus78

We remortgaged in Jan and had estimated value of property at 185K (as that's what we paid for it 2 yrs ago). The valuer valued at 170K. Wasn't really a problem for us as we had put down a big deposit on the house 2 yrs previously and were still LTV lessthan 90%. I suppose it depends if what house prices have been doing in your recently.
Sorry, I know its not what you want to hear.
Good luck

jatwap

dexters_mum wrote: »

Certainly you can estimate the value of your house at £168k but remember it won't be you who puts the official valuation on it and then it is up to the lender whether they will lend on the amount you wish to borrow.

DM

So, the mortgage company will value my house as part of the mortgage application process but do I pay for that or do the mortgage company?

Also, what happens if I apply for a mortgage but my home isn't valued at the level I need it to be valued at in order to secure the preferential (90% borrowing) rate? - i.e. am I able to reject the mortgage on offer at that point?

lwcus78

I had a fee free remortgage with britannia, so didn't pay. There was a clause saying if we pulled out after the valuation we would have had to pay for it. Not sure how other mortgage lenders work.

dexters_mum_2

It depends on the company, like lwcus78, I also had a fee free remortgage with free valuation, sourced by our broker, some will charge you, some won't, best to shop around with a broker if you want a free valauation.

Yes, if the house wasn't valued at the rate you needed to secure the borrowing rate you want, you can reject the mortgage however, be aware that if a surveyor has put a value on it, it could be hard to get another surveyor to be a different value on it, although it is possible 2 surveyors can put different values on it.

You won't have any control of the value placed upon the house for survey purposes, so you'd have to make a decision based on the value which was put on the house as to whether you would want to proceed, remember if you reject the mortgage based on the valuation and subsequently you want to go via another lender and get another survey, they could value your house LESS than the first surveyor.

I would personally have a look on one of the property prices websites and get an indication of houses which have sold nearby for a relative indication of value.

DM

silvercar

You need to work out what your house is worth. Use the house price websites to discover prices achieved for similar houses and look at estate agents for current asking prices.

Once the mortgage lender has had a valuation they will decide whether to offer you a mortgage and how much and what rate. Whereas you can always reject the mortgage offered, continually applying for mortgages will affect your credit rating as each application will show as a search on your credit record. Better to be realistic from the start.