How To Value A House For Remortgage?

Couple Standing In Front of their House

Remortgaging a house is a popular and tax-free way to gain your built-up cash equity. Understanding the value of your house is crucial when considering a remortgage. Here’s how to remortgage your house and get a proper property valuation for a remortgage.

When looking to remortgage a house, lenders will begin by considering the market value of your property right now as it relates to the price you initially paid for it or how much it was valued at the last time you refinanced it. This remortgage valuation is essential as it determines how much extra you can borrow against your property.

‘How to value a house?’, you may wonder. To value your house for a remortgage, you can use free online tools that utilise HM Land Registry sold price data. This data is a primary source which is used by professional RICS valuers for remortgage valuation. The valuer will consider a variety of factors about your property when they visit, including the construction, the current condition, any recent improvements, the size of the home and property, the amount and condition of the garden space, comparable property sale prices, your location, the desirability of the area, and your leasehold details.

Keep in mind that lenders may impose valuation limits on the remortgage, requiring a minimum equity percentage, possibly something like twenty-five per cent or more or less, to safeguard against negative equity scenarios taking place. They factor in your employment status, your net income, the remaining mortgage term, and your plans for the remortgage funds from remortgaging a house. These factors may also affect the amount you can borrow for a remortgage.

If your remortgage has been down-valued by the surveyor, you have the option to discuss the report with your mortgage broker or with the lender’s representative. They may forward the valuer’s findings and evidence for you to take some time to review. If you disagree with the valuation, you can provide additional evidence or examples of comparable properties to support your case. The valuer has a legal obligation to respond to your enquiries regarding your remortgage inquiries.

When you are ready to remortgage your house, you can choose between lenders offering different approaches to the value of the house. Some lenders may conduct basic checks remotely, while other lenders will send a surveyor to assess your property in person. It is going to be vital for you to understand the process to get the best remortgage deal for your property.

Important things to know about remortgaging a house and the re-value process:

  1. Benefits of Remortgaging: Remortgaging allows you, as the homeowner to be able to access the equity that has built up in your property. By switching to a new mortgage deal, you as a borrower, may be able to secure lower interest rates, reduce your monthly repayments, consolidate your debts, or release cash to complete home improvements, investments, or for other purposes you may need.
  2. Remortgaging Costs: While remortgaging can be a cost-effective option in the long run, be aware that there are fees involved in the remortgage process. These fees may include arrangement fees, valuation fees, legal fees, and even possibly exit fees from the current mortgage deal. It is very important to factor in these costs when considering a remortgage so you can budget and plan for them.
  3. Timing for Remortgaging: The timing of a remortgage is critical. It will be important to begin the process of remortgaging before the expiration of the current mortgage deal so that you have time to do your research, comparison of remortgage lenders’ offers, and the completion of paperwork. Interest rates move and economic conditions change, so be sure to keep that in mind as you decide the best time to remortgage your property.
  4. Shop Around: When you are considering remortgaging your house, it is going to be essential to shop around and compare deals from several different lenders. Your current lender might offer a remortgage option, but exploring the market can help you find more competitive rates and terms from other lenders. Also, different lenders may give a different house value for remortgage.
  5. Equity Release and Further Advances: You, as a homeowner, can remortgage for better terms. You can also consider equity release, which is where you would borrow against the increased value of your property since the initial mortgage was taken out. Further advances allow you, as the borrower, to access additional funds from your current lender without having to switch deals.
  6. Seeking Professional Advice: The process of remortgage can be very complex, and the remortgage house valuation is just one small piece of the remortgage puzzle. Talking to a mortgage broker or a financial advisor can help you as you navigate your options, understand the implications involved, and make informed decisions throughout the entire remortgage process.
  7. Financial Health and Credit Score: Lenders will be taking into consideration your financial health, your current credit score, and affordability when your remortgage approval is in process. Take the time to be sure that your credit report is accurate and be sure that work to build your credit score before you apply for a remortgage on your property.
  8. Fixed vs. Variable Rates: When choosing a remortgage property deal, take the time to think through whether you want a fixed-rate mortgage, which is one with a stable interest rate for a specified period, or if you prefer a variable-rate mortgage, which is where the interest rate changes as the market conditions change. Each option has its advantages and disadvantages to keep in mind.
  9. Early Repayment Charges: Before remortgaging, it will be essential to check to see if your current mortgage agreement includes charges for repaying your mortgage early. These are sometimes called ERCs, which stand for Early Repayment Charges. This is what your lender charges you if you completely repay your mortgage before a specific period, usually that specified period occurs during the initial fixed-rate or introductory period. These charges can have an impact on how cost-effective it would be to remortgage, so it will be very important to allocate them to your budget.
  10. Mortgage Terms and Length: When you are looking at how to remortgage a house, you have the option to change the term or the length of your mortgage. If you extend the term you can reduce your monthly repayments, however, it may increase the total interest paid over the lifetime of the mortgage. If you shorten the term, it may help you to pay off the existing mortgage sooner, but you may have higher payments per month.
  11. Interest-Only Mortgages: As a homeowner, you may have an interest-only mortgage, where you are only paying the interest on the loan and not paying the principal amount. When you remortgage an interest-only mortgage, it is vital to have a repayment plan in place so that you can pay off the principal at the end of the mortgage term. Lenders often require evidence of your repayment strategy before they will approve the remortgage.
  12. Using a Mortgage Broker: Hiring and using a mortgage broker can be incredibly beneficial while you are in the remortgage process. A broker will have access to a great variety of mortgage products from a variety of lenders. This can be a big time saver as you work to compare all of the offers. Further, they can give you their expert advice with your financial circumstances in mind, thus being able to help you to find the best remortgage option out there for your needs.
  13. Affordability Assessment: Lenders will conduct an affordability assessment to decide if you will be able to afford the new mortgage. They will look at your income, your current expenses, and existing debts that you owe to be sure that you will be able to manage the new mortgage payments without negative results.
  14. Changing Mortgage Types: When you are in the process of remortgage, you can also consider making a switch from one mortgage type to another. For example, you could move from a repayment mortgage to an interest-only mortgage or the other way around. Things can happen to your monthly payment when you change mortgage types and the cost, overall, of the mortgage, so you’ll want to carefully consider things when you think about switching types of mortgages.
  15. Remortgaging for Home Improvements: Remortgaging is one-way homeowners gain money to fund important home improvements, such as an extension or a renovation. If you borrow against the increased value of your property, then you can invest in various fixes or enhancements to your property. The enhancements can then increase your property’s value.
  16. Impact of House Price Changes: Fluctuations happen, over time, to the value of your home due to property market changes. Be sure that you are aware, when considering a remortgage, that if your property has decreased in value, this could negatively impact the amount that you will be able to borrow. However, if your property has increased in value, then you may have more opportunities for better remortgage deals than you may have originally thought possible.

Your situation, as a homeowner, is unique to any other homeowner. Your remortgaging choices should be based on your own financial goals, your circumstances and your goals for the long term. It will be important to seek advice from financial professionals for your remortgage process. It will also be important to remember to keep yourself informed regarding market conditions. This will help you to make informed decisions throughout your remortgaging process.

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