What is a down valuation and what can you do about it?

So, you’ve found your dream home and you have agreed a price with the seller, happy days! But then, your mortgage lender decides that your new property isn’t worth what you’ve agreed to pay – and they won’t lend you the amount you need! You have just experienced what is known in the business as a ‘down valuation’. Suddenly, you and the seller are in the very uncomfortable position of negotiating a new purchase price, or you may even have to pull out of the purchase altogether. It’s becoming increasingly common, happening in nearly half of house sales across the midlands according to a survey last year.

Why does it happen?

There are several factors at play. The economy, while recovering, is still volatile. This means that lenders are more averse to risk and are fearing a property value downturn. They don’t want their borrowers to be caught in a negative equity situation where the value of a home is less than the mortgage lent against it. The stamp duty holiday is about to end as well – which could pour cold water on the property market. All of this, combined with over ambitious valuations by sellers and their estate agents create a perfect recipe for widespread down valuations.

What can I do to avoid it?

The good news is that a down valuation doesn’t always mean the end of the road for your house purchase. Here at Acclaimed Mortgage Consultancy, we can discuss a number of options to help you go ahead with buying your dream home. Would you be able to borrow a larger sum of money? Is it worth seeing if another lender may value your property more generously? Is it actually in your best interest to walk away and avoid the possibility of negative equity? We can help you to assess which option is best for you.

Don’t let down valuations get you down

While down valuations are an unwelcome risk to a property purchase, our team will work hard for you and help you on your journey towards your dream home. Get in touch for more information.

If you have any questions about your mortgage, or future plans please get in touch for a no obligation call to discuss your circumstances. Call our team on 01676 533658 or email sandy@mortgage-consultancy.co.uk.