When considering a remortgage, one of the crucial steps is getting your house valued. The valuation determines the current market value of your property, which directly influences the terms of your remortgage, including the amount you can borrow and the interest rate you’ll receive. This comprehensive guide explores what to expect during the house valuation process for remortgaging in the UK, covering preparation, factors affecting valuation, types of valuations, the valuation process, potential outcomes, and tips for maximizing your property’s value.
Importance of House Valuation in Remortgaging
House valuation plays a vital role in remortgaging for several reasons:
- Loan-to-Value Ratio (LTV): The valuation affects the LTV ratio, which is the loan amount divided by the property value. A lower LTV can secure better interest rates and more favorable terms.
- Borrowing Capacity: The valuation determines how much equity you have in your property, impacting the amount you can borrow.
- Approval Process: Lenders use the valuation to assess the risk associated with lending. An accurate valuation helps in getting the remortgage approved.
Preparing for a House Valuation
1. Documentation and Information
- Original Purchase Documents: Keep your original purchase documents handy, including the sale price and date.
- Previous Valuations: If you have had any previous valuations, have these ready for reference.
- Mortgage Details: Provide details of your current mortgage, including the outstanding balance and lender information.
- Renovation Records: Document any improvements or renovations made to the property, including costs and completion dates.
- Planning Permissions: If applicable, provide details of any planning permissions granted for extensions or alterations.
2. Property Condition
- Repairs and Maintenance: Ensure the property is well-maintained, addressing any repairs or maintenance issues that could affect the valuation.
- Cleaning and Decluttering: A clean and clutter-free home creates a positive impression and can influence the valuation.
- Curb Appeal: Improve the exterior appearance of your property, including the garden and entrance, to enhance first impressions.
3. Market Research
- Local Market Trends: Research recent sales of similar properties in your area to understand the local market conditions.
- Comparable Properties: Identify comparable properties that have recently sold, focusing on size, condition, and location.
Factors Affecting House Valuation
1. Location
- Neighborhood: The desirability of the neighborhood, including safety, amenities, and school quality, significantly impacts property value.
- Proximity to Transport: Access to public transport, major roads, and airports can enhance property value.
- Local Developments: Upcoming infrastructure projects or developments can positively or negatively affect property values.
2. Property Condition
- Structural Integrity: The overall structural condition of the property, including the foundation, roof, and walls, is a critical factor.
- Interior Condition: The condition of the interior, including kitchens, bathrooms, and flooring, plays a significant role.
- Energy Efficiency: Properties with higher energy efficiency ratings can attract higher valuations.
3. Size and Layout
- Square Footage: The total size of the property, measured in square footage, is a primary factor.
- Number of Rooms: The number of bedrooms, bathrooms, and living areas impacts the valuation.
- Layout Efficiency: An efficient and functional layout can enhance the property’s appeal and value.
4. Improvements and Upgrades
- Renovations: Recent renovations, such as new kitchens, bathrooms, or extensions, can significantly increase the property’s value.
- Upgrades: Upgrades, including modern fixtures, fittings, and appliances, contribute to higher valuations.
- Sustainability Features: Eco-friendly features, such as solar panels or energy-efficient windows, can enhance value.
5. Market Conditions
- Supply and Demand: The balance between supply and demand in the local housing market affects property values.
- Economic Conditions: Broader economic factors, including interest rates and employment levels, influence the housing market.
- Seasonal Trends: Property values can fluctuate seasonally, with certain times of the year being more favorable for valuations.
Types of House Valuations
1. Automated Valuation Models (AVMs)
- Overview: AVMs use algorithms and data from various sources to estimate property values.
- Pros: Quick, cost-effective, and convenient.
- Cons: May lack accuracy and not account for unique property features.
2. Desktop Valuations
- Overview: A valuer conducts a valuation based on data and information without visiting the property.
- Pros: Faster and cheaper than full valuations.
- Cons: Limited accuracy due to lack of physical inspection.
3. Drive-By Valuations
- Overview: The valuer conducts an external inspection of the property from the street.
- Pros: More accurate than desktop valuations, less intrusive.
- Cons: Limited assessment as the interior is not inspected.
4. Full Valuations
- Overview: A thorough inspection of the property, including both the interior and exterior.
- Pros: Most accurate and comprehensive valuation method.
- Cons: More time-consuming and expensive.
The Valuation Process
1. Scheduling the Valuation
- Appointment: Arrange an appointment with the valuer, ensuring a convenient time for both parties.
- Preparation: Prepare the property for inspection, ensuring it is clean and accessible.
2. The Inspection
- External Inspection: The valuer will assess the property’s exterior, including the condition of the structure, roof, and garden.
- Internal Inspection: The valuer will inspect the interior, evaluating the condition of rooms, fixtures, and fittings.
- Measurements: Accurate measurements of the property will be taken to determine the size and layout.
- Photos: The valuer may take photographs for reference and documentation.
3. Analysis and Report
- Comparable Sales: The valuer will compare your property to similar properties that have recently sold in the area.
- Market Trends: Current market conditions and trends will be analyzed.
- Final Report: The valuer will compile a detailed report, including the estimated market value, factors considered, and supporting data.
Potential Outcomes of the Valuation
1. Valuation Meets Expectations
- Smooth Process: If the valuation meets or exceeds your expectations, the remortgage process should proceed smoothly.
- Favorable Terms: A higher valuation can result in better remortgage terms, including lower interest rates and higher borrowing capacity.
2. Valuation Falls Short
- Reconsidering Options: If the valuation is lower than expected, you may need to reconsider your remortgage options.
- Appealing the Valuation: You can appeal the valuation if you believe it is inaccurate, providing evidence to support your case.
- Improving Value: Consider making improvements or renovations to increase the property’s value before reapplying.
Tips for Maximizing Your Property’s Value
1. Enhancing Curb Appeal
- Landscaping: Maintain the garden, lawn, and exterior spaces.
- Exterior Maintenance: Ensure the exterior is well-maintained, including paintwork and roofing.
- Entrance: Make the entrance welcoming with clean paths, doors, and lighting.
2. Interior Improvements
- Cleanliness: Keep the interior clean, tidy, and clutter-free.
- Repairs: Address any necessary repairs, such as fixing leaks, cracks, or broken fixtures.
- Neutral Décor: Opt for neutral colors and décor to appeal to a broader range of buyers.
3. Energy Efficiency Upgrades
- Insulation: Improve insulation to enhance energy efficiency.
- Windows: Install double-glazed or energy-efficient windows.
- Heating Systems: Consider upgrading to more efficient heating systems.
4. Modernizing Key Areas
- Kitchen: Update the kitchen with modern appliances, countertops, and fixtures.
- Bathrooms: Renovate bathrooms with contemporary fittings and fixtures.
- Living Spaces: Enhance living spaces with open-plan layouts and modern finishes.
Common Mistakes to Avoid
1. Overpricing the Property
- Realistic Expectations: Set realistic expectations based on market research and comparable properties.
- Professional Advice: Rely on professional valuations and advice rather than personal opinions.
2. Neglecting Maintenance
- Regular Maintenance: Keep up with regular maintenance to prevent issues from affecting the valuation.
- Professional Inspections: Consider professional inspections to identify and address potential problems.
3. Ignoring Market Trends
- Stay Informed: Stay informed about local market trends and conditions.
- Timing: Choose the right time to remortgage based on market conditions.
Conclusion
House valuation for remortgaging is a critical step that can significantly impact the terms and success of your remortgage application. By understanding the factors affecting valuation, preparing adequately, and following best practices, you can maximize your property’s value and secure favorable remortgage terms. Stay informed, maintain your property, and seek professional advice to navigate the valuation process effectively.