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Are you trying to buy or remortgage a property and looking for a house valuation? Down valuations are rife in the market at the moment, and they can be a real hindrance to the mortgage application process.
Property – particularly in London – isn’t holding the value it had, say, six years ago, and very little has sold in the last two years to use as a comparable when pricing. Added to this lenders are quite specific about which valuers they use – particularly at the top end – there is a marked increase of down valuations.
If you’re purchasing your property, you will agree a price with the vendor based on its asking price, and you will secure a mortgage in line with that value. Generally when you buy a property, you’ll organise a home buyers survey, employing the services of a property surveyor. However, a lender will also send in its own valuer to carry out a property valuation, and if they decide it’s not worth what you’ve agreed to pay, the lender will retract their mortgage offer. Or at least reduce the amount they’re willing to lend, leaving the buyer having to find further cash from somewhere.
This is a huge spanner in the works as it can mean starting the mortgage application process from scratch.
If you’re remortgaging, a down valuation will impact the loan to value (LTV) which needs to be achieved. As such, we’re seeing a much higher demand for mortgages around 90% LTV, with clients considering second charge products more and more. Second charges are a more expensive option, but they offer much higher LTVs than first charge mortgages.
We’re seeing an increased demand for high LTV mortgages, even at the higher end of the market, with some clients seeking as high as 90% LTV. Being aware of LTV thresholds is key because the higher the LTV, the more expensive the loan will become.
Valuing it properly from the outset is key: