Mortgage Declined Because Property Value Fell at Remortgage

Mortgage declined because property value fell at remortgage is a situation many homeowners encounter when moving onto a new deal. Even where mortgage payments have been maintained and income is unchanged, a lower valuation can significantly alter how lenders assess risk.

This guide explains why remortgages are declined when property values fall, how lenders reassess loan-to-value, and what options may still be available.

Why Is Property Value Rechecked at Remortgage?

At remortgage, lenders reassess both affordability and security.

The property acts as collateral for the loan. If its value has reduced since the original purchase or last remortgage, the lender’s risk increases.

This reassessment happens even if you are staying with the same lender or have never missed a payment.

Valuation is about risk, not fault

A lower valuation does not reflect negatively on the borrower. It reflects current market conditions, property condition, or local sales evidence.

What Causes Property Values to Fall at Remortgage?

There are several reasons a property may be valued lower than expected.

Common causes of down valuations

• Changes in local market conditions
• Fewer comparable sales in the area
• Property condition deterioration
• Previous overvaluation at purchase
• Reduced demand for certain property types

Even small percentage changes in value can have a big impact on remortgage outcomes.

How Falling Property Value Affects Loan-to-Value

Loan-to-value (LTV) is one of the most important factors in remortgage decisions.

If your outstanding mortgage balance represents a higher percentage of the new valuation, your LTV increases.

Why higher LTV causes problems

As LTV rises:

• Fewer lenders are available
• Interest rates worsen
• Some products become unavailable
• Affordability stress tests may tighten

If LTV moves outside lender limits, the application may be declined outright.

Why a Remortgage Can Be Declined Even If You’ve Never Missed a Payment

This is one of the most frustrating aspects for borrowers.

Lenders assess remortgages as new lending decisions. Payment history is positive, but it does not override security risk.

If the property no longer supports the loan at acceptable LTV levels, policy may require a decline.

Does This Affect Fixed-Rate Maturities?

Yes. This often happens when a fixed rate ends.

Borrowers expect to remortgage to a new deal, but the valuation at that point determines eligibility.

If value has fallen since the previous deal was agreed, options can be limited.

Can a Mortgage Be Declined Even With the Same Lender?

Yes, depending on the situation.

Product transfers

Some product transfers do not require a full valuation or affordability check. In these cases, a lower valuation may not matter.

Remortgaging or additional borrowing

If you are changing lender or requesting extra borrowing, a full valuation is usually required. A reduced value can lead to a decline.

What Happens If You Fall Into Negative Equity?

Negative equity occurs when the mortgage balance exceeds the property value.

In this situation, remortgaging to a new lender is usually not possible. Options become more limited.

Borrowers may need to remain with their existing lender or move onto a standard variable rate.

Why Lenders Are Strict About Down Valuations

Lenders are required to manage risk carefully.

If a borrower were to default, the lender must be confident the property could be sold to recover the loan. Falling values reduce that margin of safety.

This is why remortgage decisions can feel harsh even when finances are stable.

What Options Are Available After a Decline?

A mortgage declined because property value fell at remortgage does not always mean there are no next steps.

Option one: product transfer with your current lender

If available, a product transfer may avoid a full reassessment and valuation.

Option two: reduce the loan-to-value

Making a lump-sum repayment can reduce the mortgage balance and bring LTV back within acceptable limits.

Option three: wait and reassess later

Allowing time for market conditions to improve or for further capital repayment can open options later.

Option four: consider a specialist lender

Some lenders are more flexible at higher LTVs or with certain property types.

You can learn more about lender flexibility in our guide on specialist mortgage lenders.

Does Improving the Property Help?

In some cases, yes.

Addressing condition issues, completing renovations, or improving energy efficiency can positively influence future valuations.

However, improvements must be reflected in comparable sales to affect lender valuations.

Can You Challenge a Down Valuation?

Challenging a valuation is sometimes possible, but success is limited.

Lenders rely on evidence-based valuations. Unless there are clear errors or missing comparables, revisions are uncommon.

How Deposit or Equity Levels Influence Outcomes

Higher equity provides a buffer against valuation changes.

Borrowers with lower balances relative to value are less exposed to declines and have more remortgage options.

This is why LTV planning matters long-term, not just at purchase.

What If You Were Planning to Raise Capital?

Capital raising is often the first casualty of a down valuation.

Even if a remortgage is possible, additional borrowing may be declined if LTV limits are exceeded.

This can affect plans for home improvements, debt consolidation, or other projects.

How to Prepare for Future Remortgages

Forward planning can reduce the risk of unpleasant surprises.

Steps that may help

• Monitor local property values regularly
• Maintain the property condition
• Reduce mortgage balance where possible
• Avoid assuming automatic remortgage approval

We explain lender checks further in our guide on how mortgage valuations work.

Common Misunderstandings About Down Valuations

• “House prices always go up”
• “My lender won’t reassess value”
• “Payment history guarantees approval”

At remortgage, valuation and risk always matter.

Key Takeaways

• Mortgage declined because property value fell at remortgage is LTV-driven
• Lenders reassess security at remortgage
• Falling values reduce product availability
• Alternative routes may still exist depending on circumstances

If you want personalised advice, speaking to a regulated mortgage adviser may help clarify next steps.

This guide provides general information only. Personalised mortgage advice should always come from a regulated mortgage adviser.