Bank valuation for remortgage?

[Cee555]

I was hoping for a bit of advice on bank valuations. We’re in the process of moving to a larger house further North. Having equity built in the smaller house we currently live in, we were looking to remortgage and use that as a deposit for the new house. We would then convert this to a buy to let.

Our current property was valued at £390,000 by east are agents but the bank has had its surveyor come around for the remortgage who has valued it at £355,000. It’s a complete laugh.

But as most mortgage providers will look to have a 25% deposit if you’re getting a buy to let mortgage, this brings down our equity but also brings down the 25% we need to leave in this house. So I’m minded not to contest it. However, if the bank giving us our buy-to-let values this at £390,000, we will be stretched very thin.

Has anyone had a situation where the buy-to-let mortgage provider has valued the house at significantly more than the other bank within a couple of months of each other?

Any help/insight will be appreciated.

Estate Agent, not East are… autocorrect!!

Not a buy to let situation but the first bank we approached for a mortgage on our current flat valued it £50k lower than the next one, so it’s certainly possible, and this was in late 2019 so pre covid price madness.

There are a lot of downvaluatuons at the moment because the market is quite high and it’s unlikely to be sustained. You could get a second opinion but it might not work.

You could tell the bank you need to capital raise for home improvements - so more than 75%. But then 2 months later say plans have changed, you want to move and ask for a consent to let. That might work.

Thank you, both!
@Dimondsareforever, we will need a new mortgage at that point as we will be transferring the house to a holding company… hence my concern about a revolution.

We’re leaving this house as a buy to let because hubs work is mainly in this area - he’s been lucky to get a project till 2028 up North, but we will have to come back at some point and risk being completely priced out of the area.

Revolution … looool, I’m full of typos today! *Revaluation!

Silly question, has the valuer actually been to your house? I ask because when we remortgaged after doing an extension etc etc, they did a drive by valuation and estimated it at £40k under what we thought (and indeed was initially worth before we extended so it made no sense!). Skip to the end, they ended up actually visiting and then the £40k was added on, so it was as expected. I hope you get it sorted!

Thank you all for your help on this - yes the surveyor came around.
We had two property agents around as well and they both valued it at £390 and £385 with a strong possibility that it might go over that as it’s green facing and the last street for the local outstanding primary catchment.
We discussed the bank’s valuation with them and they were of the opinion that what people pay for (green facing, school catchment etc) is not of much value to the bank so they will look at ‘an x bedroom in this area will sell for…’ which makes sense.

We contested the valuation and shared the estate agents emails with the bank but they ignored us 😅 But as they’re doing our buy to let as well, I say let them value it at 355k; less for us to pay when we convert it to a buy to let!

We remortgaged a 2 bed terraced btl from one BS to another, leaving in all equity built up in the btl. House next door sold the previous year for £175k and house on other side earlier this year for £180k. Mortgage valuer valued house at £160k despite it having had a new bathroom and in garden new fence. It did not really matter to us as had enough equity anyway but rediculous.

@Cee555 they ignored your emails because they go by sold prices in the area in the last 6 months, not Estate Agent valuations.

I work for a bank so I'm writing from a banks point of view
The bank I work for use a panel of valuers who are entirely independent from the bank itself. This is to avoid any conflict of interest
We have to take a qualified valuers opinion over an estate agents. Very occasionally our internal surveyors can and do overturn valuers opinions but it's not often as its difficult territory. There has been a huge increase in house prices over the past almost 2 years but land registry is very slow to update
Valuers more often than not use sold price data as comparable evidence for their valuations and usually use 3 comparables to support their figures
There is also caution over the increased house prices and a valuation for mortgage purposes is very different to an estate agents valuation. It is valued for the bank for the purposes of possession. So what could the bank sell it for quickly if needed so it often comes back lower
I'm not saying valuers get it right all the time. My own property was substantially down valued when we sold it a few years ago by a laughable amount. Basically valued it at the same amount as a property sold a few years earlier in dire need of full refurb. We'd done extensive works and it was immaculate when we put it on the market and sold in a few days with numerous offers. So I can understand how frustrating it is. The valuer that valued my old house is a firm well known for massively down valuing properties
I'd say that currently the majority of properties are being down valued from the agreed asking price or estimated value. It is sometimes worth trying another lender. In some areas though there is limited coverage and only one or two valuers are available

Thank you very much for the insight, everyone. Jmaho, that was very useful to know!