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7 steps to getting higher refinance values

strategic planning Jun 11, 2018

When you are ready to apply to refinance a buy-to-let property that you have recently purchased and renovated you’ll need to have it valued.  This is often a point of friction when the valuer doesn’t agree with what you think the property is now worth.

In order to persuade your mortgage lender’s surveyor that you’ve added considerable value to your property, you’ll need to put in some work.  They’re programmed to look at the price you paid and offer based on that – unless they see compelling reasons to do otherwise.

Your challenge is to prove disparity between the condition of the property when you bought it and the current condition you are asking to be valued.

Telling a surveyor you’ve revamped the kitchen and bathroom and completely redecorated is unlikely to convince them to value the property at much more than you paid.  So it’s over to you to persuade them the property is worth much more.

I use the acronym IMPROVE to tick off all the things you need to do.

IMAGES: Take pictures of every nook and cranny, inside and out before you start any refurb.  They’ll be powerful evidence of how much then property has improved.  Take ‘during’ photos too to show the work in progress.  Aim to use the same angles and positions and take both longshots and close-ups. Take ‘after’ photos too, a valuer doing multiple valuations in a day will benefit from photos that remind them of exactly how the property looked when they are writing up their report.

MAKE THE EFFORT:  Turn up.  You can’t influence a surveyor if you’re not there when they carry out their survey.  Being present means that you can develop a good relationship with the surveyor – and the world works on good relationships.  If you really can’t be there send someone who is fully briefed and has all the paperwork to represent you.  This person needs to understand the importance of persuading the surveyor of the real value of the property.

PURPOSE:  If you’re planning to let the property as a single residence, this is less of an issue, but if you’ve converted it to flats or an HMO (with appropriate planning permission and/or licence) it’s important that the surveyor knows this as it will affect the overall value he puts on the property.

To add to this provide comparable value for similar properties that have sold recently in the area.  On the market properties don’t count – who knows what someone may bargain the final price down to!

REFURB:  Provide a work schedule of all the improvements made.  The more detailed the better – aim for the level of detail a QS will put into a report.  Together with your images, this is solid evidence of the amount of work that has taken place.

OCCUPY:  A house is not a home until someone lives in it.  A property looks better with furniture so if you haven’t already put a tenant in it, it’s worth putting some furniture in.  If you do this regularly, having the basics in storage ready would be ideal, some investors group together to get some good second-hand furniture to use when needed.

VALUATION:  Get your own valuation.  Having a RICS surveyor provide you with a valuation report before the lender’s surveyor comes in is another persuasive piece of paper to add to your pack.  A similarly qualified colleague’s opinion is worth more than yours!  This is doubly important when you’ve converted a building for another purpose as the exterior looks the same, but the interior may have changed dramatically.

EXPECTATIONS:  What you think your property is worth and what the lender’s surveyor thinks are likely to be different.  They will always see the property as bricks and mortar, rather than as a single residence, flats or an HMO.  The lender’s first concern is ‘what happens if you can’t repay the loan?’ and will see the property as similar to the house next door.  This means they will intend to sell it with vacant possession and will expect it to be valued in the same way as a single residence.

To get income-based valuations the interior must be substantially different to the house next door e.g. ensuites and kitchenettes in every room, two range cookers and sinks in the kitchen, wired-in smoke, fire and CO2 alarms, etc.

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Making good decisions, based on the right factual information is half the battle.  The other half is to understand the valuer who will carry out the survey and put a value on your property and the way that they think.  If you are well-prepared with relevant paperwork, supporting images, provable facts and evidence to make your case with empathy for the valuers overworked schedule not only will valuers be more likely to appreciate that you are trying to make their job easier, but you can be more confident that they’ll be valuing your property based on real information.

This is just a small part of what I teach.  You can find out more on the Recycle Your Cash Property Finance Masterclass.

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