Property not worth what I told bank on additional borrowing application.

[30ish]

Credit checks fine, everything else fine. Applied for additional borrowing this morning. This afternoon next door neighbour had the estate agent round so I asked them to give me a quick valuation. They think 10k below what I've told the bank. I've already paid valuation fee of £242 - buggered now aren't I? Low loan to value too. ARGHHHHHHHH! Has anybody any experience of this?

[OccamsRaiser]

The good news? The bank's valuer is extremely unlikely to be the estate agent that your neighbour had visit.

The bad news? If the bank is conducting a valuation then they will more likely use their own valuer/a chartered surveyor to do it. This could either be a 'desktop' valuation (i.e. they don't go out to inspect the property - or don't go inside) or a full physical inspection. But I'm afraid I'd be surprised if the valuation is higher than the estate agent - I've not seen it happen before.

If the loan to value is low, it shouldn't make a terrible difference though? It's only when you've got a large loan against a lower value that things get really tight. Fingers crossed for you though.

[katspaw]

There's no easy way to say this but you are going to have to be tough.

If the eventual valuation comes in less, you will need to go back to the vendor and make a correspondingly lower offer (with explanation) or be prepared to walk away.

What you can't do, in a declining property market, is overpay.

[ginmakesitallok]

Op isn't buying a property?

[flow4]

I recently had my house valued for a buy to let mortgage. I'd had 3 EA valuations of £105-110k, £115-120k and £115-125k, so I was conservative and told the bank my house was worth £110k. Their valuer then valued it at £95k. :(
I managed to release almost the loan amount I wanted by raising the LTV slightly - so 75% of £95k rather than 70% of £110k.

[30ish]

Thank you for your replies. I didn't make it very clear in my op - my loan compared to value is high not the other way round! I k

[30ish]

Oops - posted too soon! I might as well have set fire to the bloody money!

[katspaw]

Sorry, I misunderstood, I thought it was a property valuation with respect to purchase.

[pepperrabbit]

You could ring the bank and say you've been told by an estate agent you were too optimistic on your form, see if that is a deal breaker for lending you the money (at a rate you can afford).
If it's a complete non starter on the lower value and the valuer hasn't been instructed yet, you may be able to cancel the whole thing and get the fees refunded.

[30ish]

Thank you pepperrabbit. I rang the bank and told them. Fingers crossed I'm not too late. They are going to do a valuation next Tuesday morning so fingers crossed it will be ok! Im now worried that this more realistic price will not be shared with the person doing the valuation, and they will think we are dreaming! Or does it not work like this? Will they be told what we think the house is worth? I have the number of the man coming on Tuesday, should I ring him and share the new value with him? Very close to the bone though for our mortgage type!

[pepperrabbit]

I'm not sure if the valuer is usually told how much you want to borrow? I would say that I have almost never seen an external valuation come in higher than an estate agent valuation. The Bank valuer is likely to be more conservative. It may be worth calling the valuer as they have given you their number, best question is how local are they?
If the are centrally appointed and coming from a distance they may research land registry prices for your immediate area but not have the specific (catchment area/local dodgy spots etc) local knowledge that can add or detract from the amount.
But remember they work for the bank and that is to whom their responsibility lies.

[katspaw]

If you are struggling to get your head round the valuation bit, what about the other issues associated with increasing your debt levels, i.e. having a repayment plan in place, the amount of interest, longevity of loan, risk of change of circumstances, total cost of loan, risk of unemployment, fluctuations in interest rates, etc?

[30ish]

It's not a necessity and we aren't struggling, we wanted to used additional money to build a conservatory. I'm just bothered that I've basically given £242 away tbh because I though our house was worth slightly more than the estate agent said. Our mortgage type means that we need 30% equity which we will have (but only just) even if the bank agrees to the additional borrowing. If the bank doesn't, it not a problem - it just mean we've list the valuation fee. I will check my facts more thoroughly next time.

[katspaw]

Have you had chance to work out the total cost of this conservatory by borrowing the money through increasing your mortgage (nice to have but you could still be paying for the conservatory long after it's fallen to bits)?