House Valuation for Remortgage Explained
When remortgaging your property, it is important to have a valuation carried out. This will give you an indication of how much your property is worth. Whether you are sticking with your current provider or switching to a new mortgage lender, you can benefit from an accurate valuation.
In this guide, we’ve gathered everything you need to know about receiving a house valuation when remortgaging.
Why Do I Need a Valuation When I’m Remortgaging?
Valuations are often a requirement for mortgage lenders during the remortgaging process. They will use it to determine the current Loan-to-Value ratio (LTV ratio) rate of your home. This ratio is the loan you have requested against the property value and is part of the affordability criteria. This will help your lender determine overall monthly mortgage payments and interest rates.
A high LTV ratio means that your mortgage lender deems you a high risk. This will typically come with increased monthly repayments and a higher rate of interest. Likewise, a low LTV ratio can mean reduced monthly repayments and a low interest rate.
Some people remortgage their property to receive lower interest rates and monthly repayments. However, other people take out equity, meaning they will repay the remaining cost of their outstanding mortgage. This is known as equity release when money is accessed from the property. They can then take the remaining balance as cash and use it for home improvements and other refurbishing projects.
Who Does the Valuation for a Remortgage?
Your chosen mortgage lender will hire a surveyor to carry out the valuation on their behalf. This will be charged to the customer. On average, the solicitor fee for remortgaging is £3,553. This amount includes the cost of conveyancing fees, the cost of leaving your current deal, and the new deal cost.
Always check that the surveyor is regulated by the RICS. The valuation is typically completed within 3 weeks from the survey being conducted to the mortgage offer being decided.
The surveyor will begin the valuation by checking the current value of the property and comparing this to the requested cost. They will then submit their findings to the mortgage lender, who will then provide their mortgage offer.
Read more on How Long Does it Take to Remortgage?
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How Will My Property Be Valued for a Remortgage?
Your mortgage lender will instruct their surveyor to carry out the valuation in one of two ways. The method of mortgage valuation is dependent on your case. Part of this valuation may also include a minimum reinstatement value. This means your mortgage lender will know how much the property would cost to rebuild.
Desktop Valuation
The surveyor will use online valuation tools to determine an accurate LTV ratio. This includes sold properties in the same area and the sale price for current listings. They may use information taken from the Land Registry Database and consider current market trends. The valuation does not require a visit to the property itself.
Drive-By Valuation
The surveyor will carry out a physical survey by inspecting the general condition of the property’s exterior. From this, they will determine an accurate market value. This will allow them to note any issues with the roof or walls.
Read more on What Do They Look For in a Mortgage Valuation?
Extensive Surveys
If the surveyor finds any major issues of concern, the mortgage lender may ask them to carry out an extensive survey. This will help identify any defects such as subsidence.
The most popular survey available is the RICS Home Survey Level 2 (HomeBuyers Report) which is best suited for newer properties.
The RICS Home Survey Level 3 (Building Survey or Full Structural Survey) is the most comprehensive survey available. It is suitable for all property types.
In some cases, your mortgage lender will request a specialist survey such as a Damp Survey. This can differ depending on the property.
What if I Think the Valuation is Wrong?
A “down valuation” is when the surveyor has provided a valuation that is lower than your estimate. Down valuations can be detrimental during the process as mortgage lenders may decrease your total equity. This can be highly problematic for those looking to take out equity to work on home improvements.
It is important to note that this doesn’t mean that you will be refused your requested remortgage amount. However, a lower valuation may also result in a higher LTV ratio. This means that you could be subject to higher interest rates and monthly repayments.
Read more on What To Do if a Surveyor Devalues House?
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Can I Get a Second Opinion?
You can choose to challenge your down valuation by having an independent valuation survey conducted. This can be a time-consuming process; however, it will give you a case to debate the initial valuation survey.
RICS Valuer
A RICS Valuer is the best option as it means that they have the qualifications to provide an accurate valuation. Their findings will be considered by mortgage lenders. Bear in mind that this is a more costly option but it can be cheaper in the long-term if you win your case.
Financial Adviser
You can receive advice from a financial adviser who will review your remortgage application and provide you with options. They may find an alternative lender who is willing to give you the remortgage you initially applied for.
Estate Agent
Asking local estate agents to provide a valuation is a cheaper option. This is only recommended for sellers but it can give you an estimate of how much your home is worth. However, it’s important to note that mortgage lenders may only accept valuations provided by those who are regulated by the Royal Institution of Chartered Surveyors (RICS).
How to Find a Remortgage Solicitor?
The best way to find a remortgage solicitor is by using a comparison site. Compare My Move can connect you with up to 6 conveyancers. Simply fill in our conveyancing comparison form to compare quotes and save up to 70% on your remortgage costs.
Another way to find a remortgage solicitor is by checking the websites of various regulators. However, this means you will have to search each company individually and can be a time-consuming process. All our conveyancing partners are regulated by one of the following to ensure all cases are carried out to the highest standard:
- Solicitors Regulation Authority (SRA)
- Council for Licenced Conveyancers (CLC)
- Law Society of Scotland (LSS)
- Law Society of Northern Ireland (LSNI)
- Chartered Institute of Legal Executives (CILEX)
