I have got a mortgage ok with Santander but they are sending a surveyor round to value the property, I’m worried as on reading on here I have seen some people have then failed this bit?

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Hi Bulldog4
I can understand your concern. Valuation assessments are not unique to BISF houses though as a lender will sometimes request a valuation prior to lending on any property where the valuation may differ from previous land registry recorded sales.

Lenders are being far more cautious in the current economic climate and they will want to ensure that if there is any default on the loan, they will be able to recover any losses through the sale of the property and as such the property must be valued at or above the current market value.

I’m afraid it’s simply a case of waiting to see what the result of the valuation is but please let us know how you get on, so that it may help others in a similar situation.

Below is an article from the Telegraph that outlines the current ‘Down-Valuation Issue

House prices have grown by more than 7pc over recent months, according to some estimates, and in London the rate is double that.
This has led to a rise in “down-valuations”, where a lender’s surveyor values a property below the agreed price, particularly in London and the South East.
Lenders use these valuations to decide how much to lend and at what rate, potentially leaving borrowers with a big shortfall, or facing the loss of the property they are hoping to buy. Cash buyers, or those with big deposits, can pay the higher prices necessary to clinch the deal. But those needing to borrow a big proportion of the value are stuck.
If a buyer agrees a £300,000 purchase price for a property, for example, with a 20pc deposit of £60,000, they will source a mortgage for 80pc loan-to-value (LTV) at a set rate of interest.
If however the lender’s surveyor decides the property is worth only £275,000, the bank will advance only 80pc of the lower amount, or £220,000. This leaves the buyer with a £20,000 shortfall.
If they borrow more, their LTV will rise along with their interest rate, making the loan more expensive. With tough new affordability rules being introduced next month, some buyers could find they are denied loans at a higher LTV.
Felix Beeson, 31, and Hannah Stodell, 29, are in the process of buying a two-bedroom flat in Finsbury Park, London. The couple’s lender, Chelsea Building Society, sent a surveyor to value the property before signing off the mortgage. He valued it at £25,000 below the agreed sale price.
Miss Stodell, who works for a trend forecaster, said they might have to walk away from the property unless the seller agreed to lower the price.
“Competition for homes in London is fierce and we’ve already been outbid on a number of properties,” she said. “We put in a strong offer which we also felt was fair value, relative to other, similar properties, and relative to what other buyers are prepared to pay, but now we are in a situation where we have to go back to the seller and renegotiate. If the seller doesn’t agree to a lower price we will be back to square one, as well as having incurred fees and legal costs on this sale. In the meantime, property prices are rising even higher.”
Mortgage brokers and surveyors say this is an increasingly common situation. Aaron Strutt, of broker Trinity Financial, said one property in Lewisham, south London, recently attracted several interested buyers and reached a sale price of £325,000 after going to sealed bids. But the buyer’s mortgage company valued it at just £295,000, halting the sale.
Peter Bolton King, residential director at the Royal Institution of Chartered Surveyors, said the problem was indicative of a rising market. Surveyors base their decisions largely on so-called “comparable evidence”, such as recent sale prices in the same area for similar properties.
“If property prices rise quickly, comparable evidence never catches up,” he said.
Mr Bolton King said the problem was exacerbated because surveyors were nervous about overvaluing homes.
“When prices fall, as they did during the financial crisis, lenders’ first tendency is to sue surveyors for overvaluing,” he said. “As a result, surveyors have to be very certain they can evidence the value they have put on paper.”
Mr Bolton King said buyers shouldn’t necessarily be put off by a low valuation. “You have to remember why a valuer is there – they are working on behalf of the lender, not the buyer,” he said. “If you really want a property and you think it is worth a certain amount then a low valuation shouldn’t stop you buying it.”
So what can you do if your property is “down-valued” and you don’t have the money to cover the shortfall?
Ask the seller to drop their price. Ray Boulger, of brokerage John Charcol, said a low valuation could sometimes help the buyer secure a better deal. “This is particularly true if a property has been on the market for some time or it has not attracted much interest,” he said. “Of course, in a competitive market this might be difficult.”
If the seller is trying to achieve an unrealistically high price, they will keep coming up against this problem unless they can find a cash buyer or professional landlord with the funds to cover a shortfall. If they have already found another property, they may be more open to renegotiating to avoid delays.
Challenge it
Lenders are becoming more resistant to valuation appeals and few are successful, but it can be worth trying particularly if you have evidence of similar sale prices for comparable properties in the area. Do your homework – the Land Registry’s house price index allows you to search by address and lists sale prices and dates.
Ask your lender how comprehensive the valuation was. If the surveyor did not view the inside of the property and you feel it adds significant value, or you think they missed something, ask for a more comprehensive valuation.
Some lenders have toughened up their rules regarding appeals. Barclays will investigate cases only when the surveyor has undervalued a property by more than 25pc, while NatWest will not accept appeals at all.
Apply again
Valuation is not an exact science – there is a degree of subjectivity in any surveyor’s assessment. Their final figure can also depend on what the lender has asked for. Some want an estimate of the current market value of a property and others want to know the absolute minimum they would recover in a forced sale.
If your mortgage rate goes up following a valuation, you can apply for a more competitive loan from a different lender. You will have to pay for another valuation, but the new lender’s surveyor may come up with a higher price.
Mr Boulger said one client recently applied for a mortgage for a three-bedroom property in Burgess Hill, West Sussex, which he’d agreed to buy for £348,000. The first lender’s surveyor valued it at just £330,000, while the second lender’s valuation came in at £348,000. “Sometimes surveyors focus on covering their backs instead of making sensible decisions,” he said.

Source & Link to Telegraph article & Follow up comments

  • Agrigriff

    New member but thought this may be useful. I have just tried to re-mortgage my BISF Property with Natwest (failed due to valuation) and The Mortgage Works (failed due to valuation).

    Unfortunately I was not present when the valuer assessed the property but both have feed back that the property was a ‘non standard construction. This I can only presume means a BISF house.

    My attempt was to raise around 30% of the total value, and still it was declined so do not think the loan value had an effect.

    If you do find a lender, I would be interested to know who and how you get on.

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