As any experienced landlord would know and perhaps those who have purchased their own home also, the phrase ‘all agreeable, subject to the valuers comments’, is something that gets highlighted almost all of the time. As above, unfortunately it can also be used a lot by both lenders and brokers alike to protect themselves from the possible outcome of a valuer down valuing and property making a transaction unviable or even not giving a value at all. Certainly not a scenario I look to avoid with my clients where possible.
So what is it and crucially how best to manage the frustrating scenario of having your case underwritten, paid the lender fees and valuation fees, only for a valuer knock-back a property, losing your funds and perhaps a few week in the process.
The clue here is the word ‘manage’. I’ve purposely picked this as there is no avoiding this or indeed no magic formula that makes this phrase redundant. However there are absolutely best practices which can ensure my clients go into any deal with their eyes open and are looked after, both now and in the longer term.
Certain this is where a good broker will discuss these options with you and, if their doing their job properly, may even put forward the motion of not proceeding at all. Taking the view that longer term it could be deemed that this particular property is always going to be difficult to obtain finance on perhaps always be capped at 60% to 65% LTV – Which if this works by all means something to progress with!
So if we take the usual example that props up, this being a property in and around commercial units, perhaps a flat above a shop or a house next to a newsagents. However the list is certainly not exhaustive.
My first point here is that with any property, there never is any guarantee that a valuer will come back with the numbers expected, it really is down the valuers opinion on the day. Hence the phrase ‘manage’.
However there are steps that can be taken, and certainly should be taken so you can go into a transaction knowing any potential issues. What should be happening here is a broker can use their knowledge of the market to understand which lenders may be able to look at this and which lenders it will always certainly come back as a no. From there, a broker should be utilising their connections and own recent experience to be able to know which lenders are currently more favourable to properties in and around commercial units. This does change, just because a lender was more favourable 6 months ago, doesn’t mean that they would be now, especially if they feel that they have over-exposed themselves to a particular type of property.
From here I would look to make my recommendations, typically here my recommended lender but also an overall view and we would likely have future options or if this a limited market.
I’ve had a recent one where the property valued up, everything came back with positive feedback baring one comment which read ‘owing to the vicinity of the commercial unit below, this flat may be deemed as less desirable that others within the block’. Because of that the lender took the view that they wouldn’t lend, based on having what they saw as the ‘least desirable property.’
So as I started with, no magic formula but hopefully an insight into what myself and at The Wright Mortgage Broker will be doing on your behalf so that when we proceed, we have all relevant information available to ensure that you are aware of how we are proceeding.
