When it comes to remortgaging, lenders will conduct a Valuation of your property. But how can you be sure that the valuation is accurate? So how much is your house worth?
In this article, we explore how lenders go about their valuations and how you can check if the valuation is fair.
Table of Contents
What is a remortgage valuation?
Looking to Remortgage your property? Getting a precise remortgage valuation of your home is an essential step in the process.
Put simply, a mortgage valuation is a way for a lender to verify the value of the property you are planning to remortgage. It is also known as a valuation survey and is the same process the lender followed when you purchased the property.
A home valuation for a remortgage confirms the value of the property, that it provides sufficient security for the loan, and determines the loan-to-value (LTV) ratio. The LTV is the amount you borrow in comparison to the value of your home and determines the mortgage rates you are eligible for.
As part of the remortgage application process, the lender will undertake a mortgage valuation. They will instruct their own surveyor to ensure that the property is sufficient security for the mortgage. This could be a full valuation done by a surveyor, a drive-by valuation where the valuer inspects from the road or even an automated desk-top valuation. The valuation will give the lender an indication of the market value of the property, taking into account comparable sales data. The figure used by the lender to calculate the loan to value will be the independent valuation. This percentage of the property value that is being borrowed will impact the deal that can be secured.
What does a remortgage survey involve?
When buying a home, there are four primary types of surveys:
- a mortgage/remortgage valuation survey
- a condition report
- a homebuyer report
- and a building survey.
The type of survey will depend on the home’s location, the property’s age, and any unusual construction elements.
Most lenders will only require a basic valuation when remortgaging a property. This may involve a qualified surveyor going to the property and producing a brief report, a ‘desktop valuation’ which uses similar, nearby properties’ recent sales data to determine the property’s value, or a ‘drive-by valuation’ which involves looking at the property from outside.
The cost of a house valuation for remortgaging is generally based on the property’s price and can range from £150 to £1,500. Nevertheless, some lenders offer free valuations as part of their remortgage packages, often using desktop valuations.
What happens after a property valuation for a remortgage?
After your remortgage valuation, the surveyor will give their assessment of your property’s value to your mortgage lender. The remortgage process will continue if they agree and no issues are flagged.
Your remortgage valuation will also show you your loan-to-value (LTV) ratio. That’s the size of your mortgage compared to the value of your home. For example, if your property is worth £200k and your outstanding mortgage is £150k, your LTV is 75%. Generally, the lower your LTV, the lower your interest rate – and the wider your choice of mortgage deals.
It’s possible for a surveyor to conclude that the price is higher than the property’s actual value – that’s called a ‘down valuation’. If it happens, your lender may reconsider the details of the remortgage offer, possibly changing the rate they’re prepared to offer or reducing the loan amount available.
A down valuation can happen for a number of reasons, such as overstating the value on the application form or structural problems with the property.
If you’re faced with a down valuation from your lender and don’t know what to do, don’t panic. You can still get your remortgage sorted. Start by talking to your mortgage broker.
They may be able to provide you with a report detailing the valuer’s findings with supporting evidence. Carefully review it to see if there’s anything you disagree with or would like to query. For example, if the comparable properties used for the report aren’t similar to yours, you can suggest other properties for comparison.
You can also take steps to avoid a down valuation and keep your remortgage on track.
How can you avoid a down valuation?
To avoid a down-valuation, it is important to do some research to get an accurate idea of your property’s worth. Here are some steps to consider:
- Research online to find out how much similar properties in the area have sold for in the past three to six months.
- A local estate agent can provide you with a guide to the likely valuation.
- Bear in mind that the valuer will be assessing the property in its current condition; any renovations, such as a new kitchen, will not be taken into account.
Remortgage valuation tips
When remortgaging, it’s important to be sensible with your valuation estimate. Even if a house next door was listed at a record price, the actual sale price could be different. When it comes to remortgage valuations, surveyors look at what similar properties in the area have sold for, not what they were listed for.
Doing your research is key to success.
Valuing your property online
Valuing your property online can be a useful way to get a realistic estimate of comparable property values. You can access the Land Registry Database to view actual sale prices using online valuation tools.
You can also view the asking prices of nearby properties, but these may be more optimistic than the current market value. It is possible that the market has changed since these properties were first listed and that the vendors may not achieve the asking price.
Estate agent property valuation
If you’re looking to get an idea of the value of your property before remortgaging, estate agents can give you an estimate of the market price. However, there may be discrepancies between agents, so the highest figure may not be the most reliable. It could be an attempt to attract your business, for example.
What valuation should I use for my remortgage application?
When valuing your property before remortgaging, the most realistic figure should be used for your application. This will help you select the right deal for your situation, and you shouldn’t expect the lender to increase the value of the property.
The interest rates available will only be affected if a down valuation puts you in a different Loan-to-Value band. If this is the case, Halifax won’t charge you a fee for switching to another product in their range.
Reviewing the market again is also a good idea to ensure you’re still getting the best deal, even if you’re changing the mortgage product.
Have You Considered Selling Instead?
Whether you are downsizing or looking to release equity, we can buy your home for cash.
Have you considered selling your property to cash house buyers such as Property Saviour?
We’ll buy your house ‘as is’ and complete the purchase within 10 days or at a timescale to suit you.
We’ll also pay £1,500 towards your legal fees, so why not contact us today?
