It has been revealed that Halifax's valuing system for mortgages is leading to people paying higher rates because their properties are being undervalued.
The Times broke the story on the Halifax undervaluing property by up to £35,000, which potentially adds £12,000 to the cost of a mortgage.
The article featured the story of Simon Lord, 49, an estate agent, and his wife Katherine, 44, from Bath.
The couple came to the end of their mortgage with Halifax in July, and their house was automatically valued. The Halifax valuation, based on its index said that the Lord's had 25% equity in their house.
Unhappy with the figure, the Lord's paid £1,000 for Halifax’s own surveyor, Colleys, to visit their property for a physical valuation. This turned out to be 35.6% higher, at more than £1m, giving them the 60% equity required for the top deals.
“We would have had to acquiesce to a far less favourable mortgage if we’d accepted Halifax’s initial valuation,” said Lord.
Halifax said it updates its index every quarter for valuation purposes. This penalises home owners when prices are rising, though benefits them in a falling market. A spokeswoman said: “We’re confident that we have a robust process in place.”
This story adds even more weight to the advice we have been giving for several months now, people need to be carrying out their own valuations, even if they are using the services of an estate agent. This way they will know if someone is either undervaluing or overvaluing their house.
Find out how to value your own house in our How to Sell Your House guide.
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