What Is a Down Valuation?
A down valuation happens when the mortgage lender's surveyor assesses your property at a lower value than you anticipated or than you need for your remortgage. For example, you might believe your home is worth £300,000, but the valuer puts it at £275,000.
This matters because it changes your loan-to-value (LTV) ratio. If you owe £200,000, you thought your LTV was 67%, but with the lower valuation, it's actually 73%. A higher LTV often means a higher interest rate, and in some cases, the lender may not be able to offer the product you applied for.
Why Down Valuations Happen
Down valuations can occur for various reasons. The valuer may have used different comparable properties than you expected, or the local market may have softened since you last checked values. Properties that have been significantly extended or renovated don't always see a proportionate increase in professional valuations.
Non-standard construction, proximity to commercial premises, or issues like Japanese knotweed can also result in a lower valuation. Sometimes, the valuer's estimate simply differs from online valuation tools, which can be overly optimistic as they rely on algorithms rather than physical inspection.
Your Options After a Down Valuation
If your property is valued lower than expected, you have several options:
- Challenge the valuation: If you believe the valuer has overlooked recent comparable sales or hasn't properly considered improvements, ask the lender for a reconsideration. Provide evidence of recent local sales at higher prices.
- Accept a different product: The lender may be able to offer you a deal at a higher LTV band. This usually means a slightly higher rate, but it keeps the remortgage on track.
- Make up the difference: If you have savings, you could reduce your outstanding balance to bring the LTV back into the desired band.
- Try a different lender: Another lender may use a different valuer who reaches a different figure. However, this means a new application and additional credit search.
- Stay with your current lender: A product transfer avoids the need for a new valuation entirely.
How to Minimise the Risk of a Down Valuation
While you can't control the valuer's assessment, you can take steps to reduce the risk. Research your property's value thoroughly before applying, using recent sold prices for similar properties on your street or in your immediate area rather than relying solely on automated estimates.
If a physical valuation is being done, make sure the property is presentable — while surveyors focus on structural matters, a well-maintained property creates a better impression. Have details of any improvements or renovations available, particularly those that added value, such as extensions, new kitchens, or bathrooms.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.