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You do not always need to get your house revalued before remortgaging, but it can be useful if you think the value has changed since you last arranged your mortgage.
When you remortgage, the lender will usually need to know what your property is worth.
This helps them work out your loan-to-value, which can affect the mortgage deals available to you.
In some cases, the lender may use an automated valuation. In others, they may arrange a physical valuation or ask for more information about the property.
If your home has gone up in value, you may have a lower loan-to-value than before.
This could open up different remortgage options, depending on your circumstances and the lender’s criteria.
If the value has gone down, it may affect the deals available or limit what you can do when your current mortgage deal ends.
Why Does Property Value Matter When Remortgaging?
Property value matters when remortgaging because it affects how much equity you have in your home.
Equity is the difference between what your property is worth and how much you still owe on your mortgage.
For example, if your home is worth £250,000 and your mortgage balance is £175,000, you have £75,000 equity in the property.
Lenders use this to work out your loan-to-value.
A lower loan-to-value can sometimes give you access to more mortgage deals, as the lender is taking on less risk.
This is why the value used during a remortgage can make a difference. It is not just a figure on paper. It can affect the interest rates, products and lenders that may be available.
When Might A Revaluation Help?
A revaluation may help if your property has increased in value since you bought it or last remortgaged.
This could be because local house prices have risen, you have made improvements, or the property is now in better condition than it was before.
We regularly speak with homeowners who are coming to the end of a fixed rate and are unsure whether their home is now worth more than the lender’s old figure.
In some cases, a higher valuation can move the mortgage into a better loan-to-value band.
This may give the homeowner more options when comparing remortgage deals.
It can also matter if you want to borrow more, as the lender will need to understand how much equity is available before deciding what may be possible.
Do Home Improvements Affect Your Remortgage Valuation?
Home improvements can affect your remortgage valuation, depending on the type of work and how much value it has added.
Some improvements may make the property more attractive or practical, such as an extension, loft conversion, new kitchen, new bathroom or structural work.
Other improvements may make the home nicer to live in without adding as much value as expected.
This is why it is worth being realistic. Spending money on the property does not always mean the lender will value it higher by the same amount.
If you have made significant changes, it can help to tell your mortgage advisor before looking at remortgage options.
They can factor this into the discussion and look at how lenders may assess the property.
Will The Lender Arrange Their Own Valuation?
Yes, the lender will usually carry out some form of valuation when you remortgage.
This may be an automated valuation, a desktop valuation or a physical inspection, depending on the lender, property and mortgage application.
You do not usually need to pay for your own full valuation before starting the remortgage process, unless there is a specific reason to do so.
That said, it can still help to have an idea of what your home may be worth.
Looking at recent sold prices nearby, current listings and any changes to your property can give you a rough starting point.
The lender’s valuation is the one that matters for the mortgage, so your own estimate may not be the figure they use.
What If The Valuation Is Lower Than Expected?
If the lender values your home lower than expected, it can affect your remortgage options.
Your loan-to-value may be higher than you thought, which could mean fewer deals are available or the rates are not as competitive as expected.
This can be frustrating, especially if you were hoping to move into a lower loan-to-value band or borrow more against the property.
It does not always mean you are stuck.
You may still be able to remortgage, look at a product transfer with your current lender, reduce the borrowing amount, or review whether another lender may take a different view.
The right option depends on the valuation, your mortgage balance, your income and what you are trying to achieve.
Should You Challenge A Remortgage Valuation?
You may be able to challenge a remortgage valuation, but it usually needs evidence.
A lender is unlikely to change the figure just because you expected the property to be worth more.
They may want recent comparable sold prices, details of improvements or other evidence that supports a higher value.
Even then, there is no guarantee the valuation will change.
Before challenging it, it is worth checking whether the difference would actually affect your mortgage options.
If the valuation does not change the deal you can get, it may not be worth spending time on a challenge.
Getting Ready To Remortgage
It is worth reviewing your property value before remortgaging, even if you do not arrange a formal valuation yourself.
This gives you a better idea of your equity, loan-to-value and possible mortgage options before your current deal ends.
If you think your home has increased in value, or you have made improvements since your last mortgage, mention this early.
If you think the value may have dropped, it is still better to know before you are close to your deal ending.
Our mortgage advisors at UK Moneyman can look at your current mortgage balance, estimated property value and remortgage goals to help you understand what options may be available.
