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Home Equity Release: How to Get the Best Valuation and What Factors Can Affect it?

Home Equity Release: How to Get the Best Valuation and What Factors Can Affect it? 40

With the right home equity release loan, your money doesn’t have to stay locked up in the four walls around you, but can instead be put to use on anything you choose, tax-free.

That sounds like a great idea in principle, but there are a few things that impact the amount you’ll be able to borrow as part of an equity release agreement.

Aside from influential aspects like your age, the main factor at play is the value of the property itself. And because of the way this type of mortgage package works, you’ll want to get the best possible valuation to fulfill your equity release ambitions.

Understanding the relevance of your home valuation in this context

Equity release is based on both the current value of your home, and the projected increase in value that it will undergo over time.

This is because lenders want to know that they’ll be able to recoup the principal amount, in addition to interest, in future when the home is sold. And since you won’t be making monthly repayments, they have to be confident in their calculations here.

The higher the valuation, both current and projected, the more you can borrow. An underwhelming valuation, on the other hand, could scupper you if you’ve got big plans for the payout. So how can you avoid this issue?

Work with the right provider

When looking for a provider, it’s always a good idea to find a reputable company. Responsible Equity Release is not only attuned to its customer’s needs but also committed to providing precise valuations of properties.

You don’t just want a lender who’ll look at the house indexing for your area and base their assessment solely on this, because there might not be enough data to give a fair valuation, and your home could be an exception to the average.

Keep your home well maintained

It should go without saying, but even if a lender does send an expert out to value your home based not just on area averages or historic data, but on its own merits, signs of wear and tear will have a negative impact on their findings.

Paying to maintain your property to a good standard, and fixing potential problems sooner rather than later, will sidestep this point of concern.

The same goes for any structural changes you intend to make to the property, especially if the equity release package is partly being sought to help you afford something like an extension. Valuations can be hampered if non-standard materials or layouts are used, and planning consent is also a must.

Own the freehold

Equity release schemes are geared towards homeowners who not only own the bricks and mortar, but also the freehold of the land on which their property is built.

This is why it is much trickier to secure a loan of this kind if you own a flat, or even a house which is secured via a leasehold agreement.

Even if you do have lenders willing to work with you in this scenario, the valuation might be low. Thus if you’ve got the option to purchase the freehold, it could be worth taking it, especially if you’re not considering taking out an equity release mortgage for a little while yet.

Final thoughts

Every home valuation deserves to be delivered with a mixture of fairness and accuracy, whether you want to get an equity release mortgage or you are just thinking about putting it on the sales market.

Working with seasoned pros who know the area, doing your own research, and not relying solely on automatically generated estimates, is generally the best way to go about it.

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