Unfairly low valuations are causing homeowners to lose thousands on their property price. Mortgage advisors are encouraging homeowners to challenge a valuation if they think it is too low, otherwise they will miss out on the best mortgage deals available.
Homeowners have already seen house prices drop, in some cases by more than a third of their value, but some valuations are unnecessarily cautious and valuing homes far too low.
A low valuation can mean homeowners miss out on good remortgage deals because it means they have less equity in their property. As a result, the homeowner could be forced to pay hundreds of pounds more per month than they need to.
Banks and building societies are using regional house prices or average mortgage valuations for the area instead of realistic, individual house surveys so those remortgaging are not even paid a proper visit by a surveyor but instead get an estimated price for similar houses in the area, which in some cases is the county you live in.
Many homeowners have added value to their homes through home improvement work.
Mortgage advisors are urging homeowners to challenge the value being placed on their home if they think it is unfair.
David Hollingworth from London & Country says: ‘While homeowners do have to accept that there has been a considerable fall in house prices, they should contest a valuation if it comes in much lower than they think their home is worth. You have to base your own estimate on facts, and not just sentiment towards your home. If you don’t, then you could be forced on to a higher mortgage rate which could force up the cost of your repayments.’
Independent mortgage advisers can see the huge difference in mortgage payments available to those with a larger deposit or equity in their home. For instance, with a 40% equity you could get a 3.34% fixed rate, with 25% equity 3.99% but with less than 25% deposit/equity you could be looking at 5.99% fixed rate, meaning you pay hundreds more each month.
Using average house prices is not too bad if you live in a built up area where all the houses are much the same, but in suburbs or villages where houses vary the price could be unfair. Challenging the remortgage valuation and getting a proper surveyor in means you’ll get a fair valuation – although of course, it could be lower than the average, so you do need to consider how your property should really value.