I bought my house in South East London 11 years ago for about £1.7million, and currently owe around £1.3million on the mortgage.
I pay around £2,350 per month, on a tracker deal 2 per cent above the base rate.
Last November, I noticed the extremely low mortgage rates on the market and decided to remortgage to a five-year, interest-only fixed rate of 0.89 per cent with my current lender TSB.
I calculated that this would cost me around £950 per month – a huge saving.
House headache: Our reader has been trying to persuade his mortgage lender TSB that his house is worth £1.3million more than the figure it was valued at – but with little success (Stock image and not the actual property)
In order to get this product I needed at least 40 per cent equity in the property. I had the house valued by three estate agents at between £2.6million and £2.8million, which would give me just under 50 per cent equity at least.
But when I tried to remortgage TSB said my house was valued at £1.3million: half of what the local agents said and £400,000 less than I paid for it 11 years ago.
This would mean I was almost in negative equity. If I remortgaged I would be paying some of the highest rates on the market – if indeed I could qualify for a remortgage at all.
I complained about this yet TSB is sticking firmly with its figure.
It doesn’t make sense as house prices are rising fast in my area. The house opposite mine, which is smaller, has just sold for £2million – a 33 per cent increase on their purchase price five years ago.
I understand that mortgage lenders carry out ‘desktop’ valuations based on market data and don’t actually visit the property, so I am wondering if there has been a mix-up here. Could they be looking at the wrong house?
The 0.89 per cent rate product has since been pulled and the best five-year rates currently on the market is around 1.8 per cent, meaning that even if TSB accepted my valuation I would now be paying double the interest rate I initially wanted. T.L, South London
CRANE ON THE CASE
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Helen Crane, of This is Money, replies: You have truly been around the houses in your attempts to sort out your new mortgage.
You first contacted me about this in November, and a lot has changed since then.
While rates below 0.9 per cent were common last year, rising inflation means they have now rocketed to nearly 2 per cent for the cheapest five-year fix.
This might not sound like much in percentage terms, but for those with higher-value homes such as yours it can mean paying hundreds or even thousands more every month.
After I spoke to TSB, it agreed to carry out an in-person valuation on your house.
This valued it at £2.2million, and while you still think this is less than it is worth, it is much closer than the initial £1.3million.
TSB has also agreed to honour the 0.89 per cent rate that you were offered, and to back-date this to 1 December last year.
While its new valuation put you slightly below the 40 per cent equity that you needed, it eventually agreed to give you the rate considering the circumstances.
You have said this will reduce your monthly payments from the roughly £2,350 you were previously paying on your variable rate to just over £950, meaning you will save £90,000 over the five-year fix.
Had you taken the best five-year fix on the market for your circumstances today at 1.78 per cent, you would be paying almost £2,000 per month, or £60,000 more over the fixed period.
Mortgage mix-up: Lenders do not always visit a property for the purposes of a valuation, and may offer the loan based on other third-party data instead
You’ve told me you are ‘over the moon’ with this outcome, and rightly so – this is a huge saving.
The back-dating means you should get some extra money taken off your mortgage balance, too.
So what happened here? As you suspected, the initial valuation TSB had for your home was provided by a third party – but the lender would not explain why it undervalued your property so significantly.
Mortgage lenders don’t always visit a home to carry out a valuation – sometimes they might calculate it using an ‘automated valuation model’ instead, which means they are basing it on other available data.
You suspect that this valuation may have confused your house with a nearby flat that has the same door number, but that has not been confirmed.
It also turned out that the person you spoke to about your remortgage initially was not a ‘full-time mortgage adviser,’ which may have added to the confusion and contributed to your very long wait to get this sorted.
A TSB spokesperson said: ‘We were pleased to ensure that [the customer] got the mortgage that he wanted.’
Your story goes to show that it is always worth questioning your mortgage lender’s valuation if it doesn’t seem realistic – as it could save thousands.
Disappointing: Sky left an elderly couple without a working phone line for several months
Hit and miss: This week’s naughty and nice list
Every week, I look at the companies who have fallen short when it comes to customer service, and those who have gone above and beyond.
Miss: Sky Reader R.S wrote in asking for help when his elderly parents’ Sky phone line stopped working – a problem that had been going on for months with no resolution.
He said: ‘My parents moved house last year and took up a contract with Sky for broadband, telephone and TV.
‘All was good to start with until about four months ago when their landline suddenly stopped working. After many false promises from Sky and Openreach, the phone line has still not been fixed.
‘My parents both have mobiles, but this isn’t the point as they are of the age where they prefer to get calls to the landline.
‘My father has cancer and has registered the landline as the contact number for important medical appointments.
‘Sky keeps saying there’s nothing it can do as it’s a problem with Openreach. Is there anything you can do to help?
It is frankly outrageous that your elderly parents were left without a phone line for months on end, especially as your father was seriously ill and had registered that number for important medical appointments.
Since you first contacted me, you have informed me that your father has sadly died. I am very sorry for your loss.
Sky said the line had been disconnected accidentally when work was being done by Openreach at a neighbour’s house
I contacted Sky to ask why this had happened and when it would be fixed.
It turned out that the line had been disconnected by accident when Openreach engineers were doing work on a neighbouring property.
Sky also said that, due to your father’s health, the repair should have been prioritised as a ‘welfare’ case – but this did not happen.
I am pleased to say that the service has now been fully restored.
Sky said: ‘We are deeply sorry for the delay in fixing [the] landline and for the distress felt by his family at this difficult time.
‘Due to a number of technical errors between Openreach and Sky we were unable to issue a fix sooner.
‘Together, we have now fixed the fault and full landline service has been restored at the property’
At the same time, Sky changed the account details over to your mother’s name, to avoid further distress.
I wish you and your mother all the best.
Flying colours: Pauline was impressed with the way the bird seed seller handled her order
Hit: Garden Wildlife Direct Reader Pauline wanted to sing the praises of the online bird food retailer, Garden Wildlife Direct.
She said: ‘We placed an order with Garden Wildlife Direct for seed and suet.
‘It arrived in good time but was without the jars of peanut butter with mealworms that we ordered.
‘The suet blocks had also been substituted for suet-filled coconut shells, which some birds can not cope with so we preferred blocks.
‘I noticed that they had not changed the amount taken or given a refund. I sent an email to request how to return the shells and next day had a return email stating they had refunded for the two items and to keep the shells.
‘This I thought was good, but shortly after the three jars of peanut butter arrived free of charge. Now that was kind and very acceptable.’
We’re glad your order left you feeling chirpy.
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