My daughter took out a mortgage two years ago with a fixed rate of 3.05 per cent. This agreement will end shortly.
We are concerned because we discovered an issue that had not been highlighted in the survey when my daughter bought the house.
We recently decided to install solar panels and wall insulation to make the house more energy efficient, but the company we hired said they couldn’t do the work because we had spray foam insulation in the attic.
Mortgage Help: Our new weekly column Navigate the Mortgage Maze features broker David Hollingworth answering your questions
The original survey was conducted by the mortgage lender and nothing was mentioned about it.
Apparently many Mortgage lenders will not lend on properties that have this foam, so it could make it difficult to sell or remortgage the property.
As the remortgage deadline approaches, we fear that you will be forced to stay with the same lender and possibly at an unfavorable rate.
From what we have read online, the only way to rectify this situation is to eliminate the spray foam, which is a huge cost. What would you advise? Via email
SCROLL DOWN TO FIND OUT HOW TO ASK DAVID HIS MORTGAGE QUESTION
David Hollingworth replies: When taking out a mortgage, there are essentially two elements to satisfy the lender, before they can issue a formal offer.
The first is that the borrower can meet the lender’s requirements. The second element is that the lender will want to be sure that the property will be adequate security for the mortgage.
This ensures that the property is worth what you pay for it and that its structure and condition are in good condition.
That protects the lender’s interests in case the borrower cannot make payments and the property ends up being repossessed.
Valuing the property gives the lender confidence that they will be able to sell the property and pay off the outstanding mortgage with the proceeds, should the worst happen.
> What’s next for mortgage rates? Should they correct them?
Not all ratings are the same
Therefore, as part of the application process, the lender will request a valuation.
In some cases, the borrower may have to pay for this to be carried out, although many mortgage deals will offer incentives in the form of a free basic valuation.
The basic valuation will be for the lender’s purposes only and is not a detailed report.
It may point out any obvious and important issues that could potentially help a buyer, but is not designed to protect the buyer’s interests.
An appraisal may not always be a physical inspection of the property.
Although this is more likely to be a purchase than a remortgage, in certain circumstances a lender may rely on an automated valuation or a “drive-by” valuation, where the appraiser visits the property but does not access to her.
Therefore, it is generally advisable for the buyer to commission a second, more detailed report, either a home buyer’s report or a full structural study.
The mortgage lender may have offered an option or suggested conducting a separate survey.
Both will be more expensive than a basic appraisal, but will prepare a more detailed report to point out potential issues to the buyer.
It may be a cost worth paying as it could prevent surprises in the future and help understand potential maintenance requirements.
> Check how much you would pay with our best mortgage rate calculator
In-Depth: Mortgage lender surveys do not always involve someone entering the property, so homebuyers are advised to obtain a second, more detailed report.
What’s the problem with spray foam insulation?
Energy efficiency is clearly high on your daughter’s list of priorities.
Spray foam insulation is intended to help improve the energy efficiency of the property, a positive in this time of higher energy costs.
However, spray foam can cause problems for a property if it traps condensation in the roof space.
Of course, this is more likely when it has been installed incorrectly and can ultimately cause the roof rafters to begin to rot if the roof is unable to breathe properly.
As a result, lenders may not be willing to lend when you are present.
This may be especially true if the beams have been completely encapsulated in the foam.
There may even be times when foam is used in an attempt to prolong the life of a roof in poor condition.
However, not all lenders would necessarily rule out loans involving spray foam.
They will want the adjuster to evaluate the application of the foam and whether it could affect the structural integrity of the roof.
It will be helpful if your daughter has some certification of the work, along with any warranties issued at the point of installation.
Some lenders will simply rely on the appraiser’s feedback to decide whether to grant a loan, while others might be more black and white in their expectations.
Your roof needs to breathe – spray foam can cause roof rafters to rot if it traps condensation
It can be difficult for an appraiser to assess the roof structure, so a specialist report may be necessary.
This may not be a problem for remortgaging, when an application is unlikely to ask for spray foam and there may not even be a physical appraisal.
Alternatively, your daughter can change rates with her current lender, which would not require any appraisal.
However, he would be much more likely to raise his head at the sale of the property.
It is worth checking the original assessment to see what type of assessment it was and whether you recognized the presence of foam.
You can contact the adjuster who performed the appraisal, but be prepared because it may have been outside the scope of the report if it were a basic report for the lender.
They will have a complaints process if you wish to make a complaint.
For your peace of mind, it may be helpful to do some investigative work to ensure that the foam does not negatively affect the roof structure, which could ultimately require a new roof if left unchecked.
Given the potential problems with spray foam, the Royal Institution of Chartered Surveyors (Rics) has a consumer guide that may be a useful starting point.
ANSWER YOUR MORTGAGE QUESTION
David Hollingworth is This is Money’s mortgage expert and broker at L&C Mortgages, one of Britain’s leading specialists.
He’s ready to answer your home loan questions, whether you’re buying your first home, trying to remortgage amid rates chaos, or looking to plan ahead.
If you would like to ask a question about mortgages, please email: email@example.com with the subject: Mortgage Help
Please include as much detail as possible in your question so you can answer in depth.
David will do his best to respond to your message in a future column, but will not be able to respond to everyone or correspond privately with readers. Nothing in his answers constitutes regulated financial advice. Posted questions are sometimes edited for brevity or other reasons.
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.