What is an upfront valuation?
It’s a valuation carried out by a certified valuer on behalf of the lender. It’s usually paid for by the lender (so free to the borrower) and is done before submitting a loan application. Quite a lot of lenders allow mortgage brokers to order upfront valuations for their clients.
So what are the benefits to the borrower?
It’s important to know the value of your home before submitting an application
The benefit to the client is that you will know the value of your property before committing to an application. This is especially important for loans being refinanced – and also applications involving an equity release. You wouldn’t want to refinance a loan to another lender to later find out that it wasn’t approved because there was an issue with the valuation (a typical reason being the value coming in lower than the borrowers estimate).
An upfront valuation helps with equity releases because the borrower is able to ascertain how much equity can be released before submitting an application. If you’re investing in property – this is important because you’ll be able to make a judgement call as to whether the valuation was sufficient enough to justify releasing equity for your next purchase. If you’re renovating – you’ll know how much funds you’ll have to play with. If you’re looking to consolidate debt – you’ll know whether there’s enough equity in your home to do so.
Your application is processed quicker
Having the valuation ordered upfront streamlines the application process and gets your loan approved quicker. Instead of waiting for the banks credit assessor to pick up your application and order the valuation – they will have a copy of it already. This could potentially save you days/weeks.
This is particularly important when purchasing a property due to the time pressures involved. Most property purchases involve a “subject to finance” clause that determines how much time you have to arrange formal finance approval – so the quicker the finance is approved the better!
Avoid unnecessary hits to your credit file
An upfront valuation can also assist in avoiding an unnecessary enquiry on the client’s credit file. This is usually the case with refinance applications. If we know the value of the property before submitting the application – then we can be reasonably certain of getting the loan approved. If the valuation result is lower than expected – then you are not obligated to proceed with the application which avoids an unnecessary credit file hit.
What happens if the valuation result comes in lower than the purchase price of the property – or lower than the clients estimate?
We have a couple of options here. Firstly, we can try to contest the valuation. To do this – we need to provide sufficient evidence to back up our contest. This usually involves providing at least three comparable sales within the last 6 months to the valuer.
In some cases – we may order a second valuation via a different lender which may yield a different result.
Would you like to have your property valued?
If you’re considering refinancing or releasing equity for investment purposes, debt consolidation, a car purchase – or any other reason, and would like an up-front valuation ordered on your property, just get in touch and we should be able to assist.
If you’d like to have Jamie provide advice on your finance structure, investment strategy, first home purchase, upgrade or refinance simply complete and return this FORM and he will be in touch – this is a FREE, no obligation service.
The information herein is not intended as investment, financial, legal, taxation, building, development or any other advice and must not be relied upon as such. You should obtain independent professional advice and make further independent enquiries before making financial, legal, taxation, building, development or investment decisions.