How do I value my property before remortgaging?
Q: I am remortgaging and based my valuation on an estimate from Zoopla and local house sales. In the last few days, I have noticed some other houses up for sale with an asking price much higher than my estimate. I'm now a bit confused about what is a realistic valuation for my property. Can I just rely on my lender (Halifax) to assess my estimate fairly and if I have under estimated it to correct this?
As part of a remortgage application a lender will instruct its own valuation in order to be sure that the property is adequate security for the mortgage. That may be a full valuation by a surveyor but could be a drive-by valuation when 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 account of comparable sales data. The valuation is independent of the lender and will be the figure that will be used by the lender to calculate the loan to value. This is the percentage of the property value that you are borrowing and will have a bearing on the deal that you can get.
Carrying out research on websites such as Zoopla is a useful way of getting a realistic idea of comparable property values, as they take information from the Land Registry Database to list actual sales. You could also look at current asking prices of nearby property but that could be a more optimistic figure and, while the market may have moved on during the last few months, the vendors may not actually achieve that price.
Estate agents will be able to give you their idea of what price you’d market the property at but even if you did invite a few agents to value the property there is likely to be variance. The highest value may sound appealing but might be aimed at securing your business, for example.
Ultimately you should use the most realistic valuation figure for your application as you can, so that you select the right deal for your situation and you should not expect the lender to increase the value of the property.
The interest rates available to you will only be affected if a down valuation pushes you into a different Loan-to-Value band. If this is the case then some lenders, including Halifax, will not charge you a fee for switching to a different product in their range.
However, if you are changing product it is also a good idea to review the market again to check that it is still the best option for you.
Answered by David Hollingworth, London & Country Mortgages
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