What To Do When a Mortgage Survey Undervalues Your Property
If you're applying for a mortgage, and the valuation survey has come back under the anticipated value, it can throw a spanner into the works.
In this guide, the Revolution Brokers team runs through the options for what to do if you have had an undervalued survey.
For more assistance in this situation, give us a call on 0330 304 3040, or drop an email to [email protected].
How Do Mortgage Under Valuations Occur?
In short, the valuation is essential to your mortgage application, and if the surveyor feels that the property isn't worth what you are paying for it, the lender might withdraw an offer to lend.
There are many reasons why this happens, but it is critical for a lender that they don't lend you more than they could sell the property for were it to be repossessed.
Valuations look at other property sales nearby, and the condition of the property in question.
Some of the most common issues are around damp, and subsidence.
What Can I Do if a Mortgage Survey Under Values the Property?
There are still several options, so this doesn't necessarily mean that the entire purchase will fall through!
Here are some of the most popular options:
- Renegotiate the purchase price. If you have an independent survey that indicates that the property isn't worth the sale price, this gives you significant leverage to ask that the price be renegotiated.
- Appeal the valuation. Should you feel that the valuation is unfair, and can provide evidence of similar properties selling for a comparable price in the last six months, you can appeal the valuation outcome.
- Change lenders. Mortgage providers all use different surveyors and have different policies, so you might find that simply switching your application elsewhere will solve the problem. However, it's best to understand what credit checks have already been run and whether there are any costs involved in cancelling your existing application.
An independent broker can be a life-line in this sort of challenging situation - get in touch with the Revolution Brokers team, and we will be happy to work through the options with you and decide on the best plan of action.
Does an Under Valuation Mean the Lender will Withdraw my Mortgage Offer?
Not necessarily - but a lot depends on how much you were looking to borrow, how significant the change in value is, and what size of deposit you have available.
Lenders will offer a maximum Loan to Value, i.e. a percentage of the purchase cost. Therefore if the valuation drops substantially, they might not be able to provide a similar value.
As an illustration:
- You are buying a property for £250,000 and have a £50,000 deposit.
- The valuation comes back at £230,000, and your lender has offered a mortgage up to 80% of the property value.
- You can borrow a maximum of £184,000 (80% x £230,000) and now have a shortfall of £16,000 against the value you need to borrow.
In this situation, the seller might agree to drop the sale price to £230,000; you could find a lender who offers a higher LTV or increase your deposit value to go ahead with the purchase.
Can I Still Remortgage if a Surveyor Under Values my Home?
Usually, yes - and the options for a remortgage are similar to those for a property purchase.
You might remortgage with a different lender, whose surveyors return a different valuation, negotiate the amount you wish to borrow, or appeal the outcome if you believe it is incorrect and can show that the original value was accurate.
Mortgage Valuation Advice from the UK Experts
Getting a property valuation back and finding that the value is not what you expected can be stressful.
In this situation, it is vital to seek expert advice to ensure that your plans are not entirely derailed and explore the most straightforward options to go ahead with the borrowing.
Contact business finance broker on 0330 304 3040, or email us at [email protected] for more assistance.
