Quick bridging loan with online valuation – successfully challenged when refused

The Scenario

Our client was selling his home in Hartlepool and moving inland to the pretty village of Chilton – buying a similar 3-bed detached house priced at £170K. He needed to buy before selling, and had a substantial deposit to put down, so this was a straightforward regulated bridging loan to be secured against both properties to achieve the lowest rate.

His borrowing requirement was just 33% of the combined property value, and the projected valuations were well below the lender’s ceiling, so the properties qualified for a fast-and-low-cost online valuation (AVM or Automated Valuation Model).

Except that… one of the properties failed to meet the value we needed on the AVM.

The Solution

Failing the online valuation meant our client would have had to pay £300 for an on-site valuation - and they were cancelled due to Covid 19. He stood to lose the house he'd settled on. 

We know from experience that valuations based on online algorithms vary from week to week – depending on (amongst other factors) most recent sales in the area.

We pressed the lender to re-run the valuation: they did and the property passed. A week later his finance was available, with the exit to be the sale of his original home within 12 months.

Read our blog on AVMs and LTV thresholds during coronavirus special business measures

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