Mortgage company's valuation for remortgaging - wwyd?

[LittlePickleHead]

So frustrated.

After house hunting for 7 months now, one purchase fallen through, countless offers beaten, we had finally got our head round extending our flat instead. I've spoken to architects who think it's no problem, had a local builder give an estimate which seemed reasonable.

So I spoke to the mortgage company on Friday to get an idea of how much we can borrow and the rate etc. we have a good amount of savings so don't need to borrow the full amount. Based on current market values if we had borrow 80% ltv it would have given us plenty of money taking into account contingency.

Turns out that for remortgages our bank uses Halifax price index, which seems wildly innacurate, as it is over £100k less than the offer we have accepted, and less than we paid 7 years ago! Given we are in SE London and prices have gone crazy, this is a crushing blow. The stupid thing (that our mortgage broker admitted) was that if we were buying our flat they would offer us a 90% mortgage at the current sale price! effectively lending us way more than the Halifax valuation. So stupid!

Anyway, I'm talking to him again on Monday and trying to arrange a revaluation (although after talking to a broker this seems like it will be pointless). I'm just wondering what our options could be?

At current values I estimate that after building finished we would be at around 60% ltv so it is a sound investment.

I wondered about trying to fund the build by borrowing elsewhere (considering approaching family about this, as I'm not sure how we would borrow such a large amount of money otherwise) and then remortgaging afterwards based on the new value. But as the valuations tool seems so innacurate is this a very risky strategy? As I say we would not need it to be valued at full market value to get enough money, but if we are going to borrow from family I want to be 100% sure we will be able to pay them back quickly.

As an alternative, Does anyone know of any banks that will remortgage based on the value once work is completed?

I'm so loathe to give up on this idea as our house hunting has solidified that what we want is our flat in the same location just a bit bigger, it makes so much more financial sense to extend rather than pay through the nose for a bigger place up the road :(

Just ( hollow laugh) remortgage with a different bank/building society. Natwest wouldn't have given us what we needed to extend so we went to London and Country mortgage brokers (totally free to us) and they found us an amazing mortgage, we borrowed 80% of our home's current value, which was enough to do the work, and fixed for two years at a ludicrously low interest rate, in fact lower than my bank would have offered me on a 60% LTV mortgage. They sent their own surveyor, which of course did cost, but he agreed with our market valuation basically, we presented him with lots of information on nearby sold prices to help him along.

I would borrow a little more than you think you need, even with contingency. We ended up having to get an additional loan elsewhere, which is going to be a pain until we can roll it into the mortgage next time. And they put a retention on the mortgage, which was a nuisance too, although we borrowed that very short term from family and paid it back last week when we got the retention released.

Can they not send out a surveyor to revalue rather than go on the computer value? That's what ours did

I'm trying to organise a revaluation but he told me they normally only do it if you have extended already, but maybe I can persuade him tomorrow as the difference is so huge. I've heard that sometimes they just do drive by valuations though!

I spoke to London and country yesterday and the advisor told me we are unlikely to get a different valuation with another provider as they all the use the same pricing index, but maybe I need to talk to them again? Sounds like natwest might be worth a try, especially as we wouldn't apply til planning permission by which point land registry will have updated with recent sold prices showing the dramatic difference. That has given me some hope, thank you!

The stupid thing is that our buyers are using the same bank and they agreed with the sale price on their valuation. Bonkers that if we could buy off ourselves we would be able to raise the money (mind boggles)

Just spoke to a different mortgage advisor at L&C and he seems to think we will definitely be able to borrow the amount we need with a different bank, at a better rate to boot.

So glad I posted!

I love them :) it was the single best piece of advice I ever got on Mumsnet.