When Remortgaging Who Values Your House?

Adrian Collins

April 12, 2022

Mortgage Advice

When remortgaging your house, your mortgage provider will arrange for a valuation of your property. 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 remortgaging process works, how lenders arrive at their valuations and how to find out whether your existing lender is offering fair value for money.

How The Process Works From The Perspective Of Your Existing Lender

Your current mortgage provider will undertake its own valuation to determine what products they can offer you. They generally perform an indexed valuation but it is sometimes possible to ask your lender to complete a proper valuation. While a qualified surveyor will perform the valuation, they won’t necessarily go into great detail. In fact, the same lender might even undertake what’s known as a “drive-by valuation”, which involves an automated valuation remotely.

Why A Lender Needs To Perform A Valuation

When calculating a new deal on your existing mortgage, 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.

roofs of houses with chimney

How Do Lenders Arrive At A Valuation Figure?

In addition to taking into consideration the size, condition and location of your property, lenders surveyors are also likely to use online valuation tools to get a realistic idea of what your property is worth – they do this by looking at current asking prices and recent sales of nearby property. However, markets are fluid and may have been impacted in the months or even weeks since similar local property sales. When comparing mortgages, a surveyor may not consider your property to be in the same price range as a similar local property for a variety of reasons.

When using online valuation tools, it’s worth knowing that most sites are unlikely to display any local properties that have sold in the past six months, as it can take the land registry months to update the information on its database. As you’ll no doubt be aware, house prices can fluctuate significantly in six months, which means online valuation tools won’t always return the valuation you may be hoping for. It’s also worth bearing in mind that your current lender may not be aware if you have extended/renovated your home, so their automated valuation may well be lower than its real value.

Can I Submit My Own Valuation In My Remortgaging 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 rough idea of the market value of your property before submitting your application. A 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.

How To Value A House When Remortgaging Without Encountering Valuation Fees

If you’re looking for a new mortgage deal, working out the proposed mortgage value of your property is relatively straightforward, especially if you’ve been in the property for less than five years. As a general rule, house prices have increased annually by approximately 5% in recent years. To arrive at an accurate valuation, simply multiply year-on-year by 5%, and don’t be afraid to add a little extra money on top if you’ve carried out any home improvements, as this could potentially help you to secure a better deal.

Home improvements could encompass anything from installing new kitchens or bathrooms to adding patio doors, and these improvements will definitely go some way towards maximising the value of your home. However, things get a little more complex when it comes to major renovations like building an extension or adding a conservatory to your home. You might, for example, think that your property has increased in value equal to the cost of building an extension, but this isn’t always entirely correct. In some cases, your property might be worth even more money than what you spent, while in other circumstances it may have increased in value by slightly less than the cost of your extension.

house keys on hand

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 will not always be the case as estate agents tend to provide enquirers with the value of the property as if it were to be listed on the market. This is not the same as a valuation offered by the bank and could be inflated slightly.  

How Accurate Does My Own Individual Remortgaging Valuation Have To Be?

When submitting a remortgaging application in an attempt to get a better mortgage deal, you don’t need to worry about providing a valuation with pinpoint accuracy. It won’t be the end of the world if your own estimated valuation is slightly out. Lenders will arrive at their own conclusions with regard to the value of your property.

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 you as a customer. Financial institutions 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 is when a lender’s estimate of your property comes back lower than the valuation provided. If your lender has carried out a “drive by” valuation or ‘desktop’ mortgage valuation, you have every right to ask them to come and perform a physical property valuation. However, lenders will often decline to do so and some may also charge a fee to complete a proper valuation. If your lender has down-valued your property and you feel your proposed valuation is more than realistic, your next step should be to try an alternative lender as they may just offer a more reasonable valuation, thus ensuring that you secure the best possible deal.

brown and white concrete building beside road

What Is The Purpose Of Remortgaging?

There are lots of reasons why homeowners choose to remortgage their property, including the following:

  • To release equity towards some home improvements
  • To reduce existing monthly payments
  • To pay off a mortgage sooner
  • To raise capital for another purpose
  • To consolidate some unsecured debt

Is It A Good Idea To Keep Remortgaging?

Homeowners on fixed rate deals will find it necessary to remortgage once the deal comes to a close. Otherwise, the homeowner will find themselves at the behest of the standard variable rate (SVR), which could mean paying a much higher interest rate than the initial arrangement.

Thinking About Remortgaging? Get Help From A Mortgage Broker Today

If you need mortgage advice, why not get in touch with Beechwood Mortgages today? With a wealth of experience, our friendly, professional and knowledgeable team are here to offer advice on how to use remortgaging in your favour. For further information, call, email or use the online contact form and we’ll be happy to assist you further.

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