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Rebuild costs – mortgage company overstating rebuild costs

Following on from this mornings post about home insurance premiums and re-build costs, here’s one e-mail that I received from a ValueIreland.com reader:

I have a query regarding re-building costs and hope you may be able to offer some advice.

We have a 4 bedroom bungalow, approximately 3,200 sq ft, in Connemara, Co. Galway.  We have a mortgage of €220,000 and our now 5   year old home was valued at €290,000 roughly 3 years ago.

We  recently re-insured with a re-building cost of €350,000.  However, our mortgage providers will not accept this and want us to up this to €400,715.00 when I queried this they came back with 423,000?!

In the current climate we feel that this is way to much as we feel building costs have gone down not up as they have suggested!

This will up our insurance and unfortunately as with most of the country we’re doing our very best to keep head above water and every penny is needed and we don’t feel we should have to back down on this matter.

This kind of behaviour by mortgage companies is unforgivable. In very few scenarios will the rebuild costs of a house increase by such a margin in the current property climate.

Given the difficulties people may have in meeting current mortgage commitments and possibly not getting mortgages elsewhere in the current economic climate, these people are essentially putting a gun to the head of the home owner.

They won’t want to <!– /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:””; margin:0cm; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:”Times New Roman”; mso-fareast-font-family:”Times New Roman”; mso-ansi-language:EN-GB;} @page Section1 {size:612.0pt 792.0pt; margin:72.0pt 90.0pt 72.0pt 90.0pt; mso-header-margin:36.0pt; mso-footer-margin:36.0pt; mso-paper-source:0;} div.Section1 {page:Section1;} –>

jeopardise their current mortgage arrangement and many are likely to comply rather than kick up a fuss.

What odds that this mortgage provider also provides the home insurance for this particular consumer?

1 comments On Rebuild costs – mortgage company overstating rebuild costs

  • Please excuse me for leaving a comment but I came across your website and had to send you an email of my experience. I am buying a property based in the south of England and seem to be having the same problem. I had a private survey done with my surveyor giving a rebuild value of £95,000. My lender then arranged a valuation survey with their surveyors. The rebuild cost – £195,000. I am buying the place for £172,000….my lender is adamant that their rebuild value is correct however I have checked the correct amount on the BCIS calculator and of course my surveyor is right. I am going to exchange and complete the sale then go into battle with my lender!!

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