When remortgaging your property, your mortgage provider will arrange for a valuation. While this is standard practice for any remortgage deal, many homeowners are left wondering if the valuation of their existing property is accurate. In this article, we’re going to focus on how the remortgage valuation process works, how lenders arrive at their valuations and how to find out whether your existing lender is offering fair value for money.
How will my current lender value my property?
Your current mortgage provider will assess the products available to you. Usually, this involves an indexed valuation, but you can ask for a formal valuation if needed. This is recommended if you think your home is worth more than their estimate, possibly due to recent improvements they might not have considered.
Why A Lender Needs To Perform A Valuation
When remortgaging, a valuation provides the lender with an indication of the current market value by taking into account comparable sales data. This valuation is then used by the lender to calculate the loan to value (LTV), this is the amount you borrow as a percentage of the value of your property. This will have a bearing on the sort of mortgage deals you are likely to be offered as part of your remortgage.
When Remortgaging How Do Lenders Value My Property?
When remortgaging, the lender is responsible for valuing your property. This may involve hiring a qualified surveyor to assess its current market value compared to its purchase price or last remortgaged amount. There are various methods for this, including a full surveyor valuation, a drive-by valuation, or an automated desktop valuation. This valuation is crucial as it determines the current Loan-to-Value (LTV) ratio, which directly affects the remortgaging process and the deals available to you.
Can I Submit My Own Valuation In My Remortgage Application?
When seeking out remortgage deals, you can offer your own valuation prior to getting a remortgage without having to arrange for a surveyor to undertake a valuation – and this could of course help to save money. However, you will need to have a good idea of the market value of your property before submitting your application. You can use online sites like Zoopla as a starting point, although these are not always accurate. Another good way of doing this is to check in with one or two local estate agents, perhaps starting with the agent who originally helped you purchase your home.
Should I Get A Valuation From An Estate Agent?
You might think a valuation from an estate agent will help you to secure the best deal when remortgaging and you’d be right to do so. However, this is not always the case as estate agents tend to provide a valuation as if it were to be listed on the market. This is not the same as a valuation offered by the bank as it could be inflated slightly, potentially leading to disappointment further down the line.
How Accurate Does My Own Remortgaging Valuation Have To Be?
When applying for a remortgage to get a better deal, precise valuation isn't crucial. Lenders will perform their own assessments, so a small difference between your estimate and the actual value isn't a big deal. However, if the lender values the property lower than you expected, it could affect the interest rate they offer. To avoid issues, it's best to be cautious and realistic with your remortgage valuation to align better with the lender's appraisal and secure a favorable interest rate.
Will A Potential New Lender Charge Me For A Remortgaging Valuation?
When remortgaging, most new lenders will offer you a free valuation as an incentive to attract your business. Lenders are often keen to offer attractive remortgaging options which also often include free legals, where they instruct their own solicitor to handle your remortgage free of charge. (fees will apply if you require any other changes, for example a Transfer of Equity)
Can A Mortgage Lender Down-Value My Property?
A down-valuation happens when a lender estimates your property to be worth less than the valuation provided. If your lender has completed a “drive by” or “desktop” mortgage valuation, you can request a physical property valuation, especially if you've made home improvements which you believe they haven't factored into their appraisal. Some lenders may charge a fee for this, and others might refuse.
If your property is down-valued and you believe your valuation is accurate, consider trying another lender who might offer a more reasonable valuation, helping you secure the best possible deal.
What Is The Purpose Of Remortgaging?
There are lots of reasons why you may choose to remortgage your property, this could be:
To release equity towards some home improvements
To reduce your existing monthly payments
To clear your mortgage sooner
To raise some funds for another purpose
To consolidate some unsecured debts
Is It A Good Idea To Keep Remortgaging?
If you have a fixed-rate mortgage, it's important to remortgage when the fixed term ends. Otherwise, you'll be switched to the standard variable rate (SVR), which could mean higher monthly interest payments. To avoid this, explore all available options and lock in the best deal you can.
Thinking About Remortgaging and Need Some Support?
Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Published by Beechwood Mortgages Ref: 219335 with review and approval from Stonebridge Mortgage Solutions Limited who is authorised and regulated by the Financial Conduct Authority Ref: 454811.
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