If you are considering remortgaging your house, it is important to know how the valuation works. Your property’s value directly affects the deals available to you, the interest rates offered, and the financial advantage of remortgaging overall. In this ultimate guide, we will discuss everything about house valuation for remortgage, the options of valuation methods, and helpful tips to maximize your property value.
What is Remortgaging?
Remortgaging is where you take out a new mortgage on your property to replace your existing mortgage, either with the same lender or a different lender. Homeowners typically choose to remortgage for one of two reasons:
- Secure lower interest rates.
- Access equity to be used for renovations or for any other financial needs.
- Flexibility in terms of their mortgage Terms.
House valuation is an important step in the remortgaging process. It determines how much equity you own in your property, directly impacting your ability to qualify for and the terms of the loan.
Focus Keyword Introduction
Remortgage: How to Value Your House 6 Key Questions When Remortgaging—How to Value Your House So, if you’re new to the concept of remortgaging or searching for tips on how to maximize the value of your house, this article will give you a step-by-step guide to making it as easy as possible.
- What is House Valuation, and Why is it Necessary for Remortgaging?
- Latest articles: Understanding Equity and Loan-to-Value (LTV) Ratio
- Before we get into the valuation methods, it is important to take note of 2 significant terms:
Equity: This is the difference between your house’s current market value and how much you owe on your mortgage. So if your house is worth £300,000 and you owe £200,000, you have £100,000 of equity.
Loan-to-Value (LTV) Ratio: This percentage indicates how much of your property’s value is financed by your mortgage. For example, if you owe £200,000, as in the above example, your LTV ratio is around 67%.
The LTV ratio is used by lenders to assess what interest rates and loan products they will provide. Lower LTV ratios usually translate to better deals.
Impact of Accurate Valuation
An accurate valuation can:
- It allows you access to enhanced remortgage products at lower rates.
- Focus on your equity to enhance your borrowing power.
- Avoid the hazards of a down valuation, in which the lender determines your property’s worth to be less than anticipated, possibly restricting your options.
How to Value Your House for Remortgage
When you’re remortgaging, lenders will use various valuation methods to judge how much your property is worth. Let’s look at these processes in detail.
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Desktop Valuation
A desktop valuation estimates your house’s value using online tools and property data. Lenders use recent home sales, property type, and location trends in your area.
Pros:
- Cost-effective and quick.
- Best for uncomplicated properties without many unique features.
Cons:
- Repaid at the end of the fixed period.
- It’s not as accurate for very old or highly customized homes.
Drive-by Valuation
In this method, a surveyor walks around your property’s exterior and does not enter the house.
Pros:
- Quicker than a full physical valuation
- Emphasizes outward appearances such as curb appeal and neighborhood conditions.
Cons:
- Doesn’t evaluate the interior condition of the property.
- More accurate in homes with extensive upgrades. It comes with limited accuracy.
Physical Valuation
This is the most extensive method; a qualified surveyor will look into every aspect of your property.
Pros:
- Very accurate as it takes internal and external features into account.
- [C]ounts for renovations, structural integrity, and wear and tear.
Cons:
- Expensive and time-consuming.
- This needs your scheduling & planning.
- House Valuation Factors
Several factors play into how your house is valued. Knowing these can help you prepare your property and manage expectations.
Key Determinants
- Location and neighborhood trends: The property value can increase significantly if it is close to schools, shops, and any transportation hub.
- Property Size and Condition: Revamped or large homes are often valued more.
- Recent Renovations: Improvements such as a modern kitchen, energy-efficient windows , or new roofing can greatly increase value.
External Market Factors
So does the broader housing market. For instance, the valuation estimate may be inflated in a property boom, but this may lead to lowered estimates in a market dip.
How to Prepare Your Home for a Valuation
Things You Can Do to Increase Your Property’s Value
- Actions that will help showcase your house in its best light will help increase its value. Here’s how:
- Declutter and Clean — a clean and organized house will likely make a good first impression.
- Tackle Repairs: Take care of small problems like dripping taps, broken tiles, or torn wall paint.
Highlight Improvements: If you’ve made noteworthy changes, like a remodeled bathroom or better appliances, make sure to include them
Documentation to Prepare
The right documents can also help make the valuation process smoother:
Retrofitting receipts or permits.
- Avg sales price and data on similar properties in your area.
- Expenses related to House Valuation
- How much does a valuation cost? Here’s a breakdown:
Valuation Method Approximate Cost Desktop Valuation£65 – £200Drive-by Valuation£150 – £1,500Physical Valuation£700 – £2,000+
Some lenders include free desktop valuations as part of their remortgage packages, so check with your lender first.
The Challenges in House Valuation
Down Valuations
One of the most common frustrations is a down valuation. This happens when the lender appraises your home for less than you expected, often due to:
- Overpricing your property.
- A declining housing market.
- If this happens, you can:
Introduce more evidence to dispute the price.
Request better terms from your lender.
Discrepancies Between Methods
Desktop valuations vary widely from physical surveys for unique or heavily renovated properties. Recognizing these limitations can aid you in picking the best approach.
How to choose the right lender for your remortgage
Valuation: Comparing Lenders’ Approaches
Not all lenders apply the same rules for valuing properties. Before you make your decision:
- Learn how a particular lender does its valuation.
- Negotiating the terms of the valuation will affect your borrowing power.
- How To Value House For Remortgage [2023 Step By Step Guide]
A simple checklist to keep in mind:
- Look up recent sales in your neighborhood.
- The best valuation method (desktop, drive-by, or physical)
- Get your house in shape by decluttering, cleaning, and repairing it.
- Collect relevant paperwork, such as renovation receipts.
- Go through the valuation report and resolve any differences, if required.
House Remortgage Valuation FAQs Related posts:
What if my home is undervalued?
You might be required to put in more equity or agree to a higher LTV ratio, which would raise your interest rate.
How often should I value my property?
Getting a valuation every few years or after major market shifts happen.
Can I appeal a lender’s valuation?
Yes, you can contest a valuation if you have proof from sales similar to yours or renovation records.
Conclusion
Making sure your house is valued properly is at the heart of remortgaging well. It drives the offers you might get and helps you tap into the power of your property’s equity. This comprehensive guide will walk you through this process so you feel confident, get your home valued properly, and get the most advantageous remortgage terms.
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