CVs upset mortgage set-ups

Photo / Brett Phibbs

Banks are using new council valuations to call in property loans and change terms, according to mortgage-holders.

Auckland homeowner Lyndsey Thompson said he had to negotiate with his bank after his rating value was set at $1.4 million on a new-build - $550,000 less than a valuation he had conducted three years ago.

"I have considerable equity in this property and yesterday I rang to arrange a temporary overdraft and my bank said because the GV was now $1,400,000 ... they needed a new registered valuation to lend against. I service $100,000 in interest to this bank annually, plus fees on business accounts.

"They see my turnover and yet they responded with a curt response because of the new CVs.

"Great news for valuers as they are going to have to revalue a lot of properties as the banks are taking this as an excuse to call in loans and restrict borrowing," he said.

Hein Erasmus, the owner of a leaky unit on Gulf Harbour Dr, said the council valuation had more than halved his previous appraisal - which in turn breached his loan deal.

"It had previously a CV of $345,000 and we borrowed around 80 per cent to 90 per cent against it.

"The problem now is the valuations dropped 67 per cent to $121,000 because it is a leaky complex. Suddenly the bank and us have a problem. We owe the bank 247 per cent of the value," he said.

Banks usually loan no more than 80 or 90 per cent of a house value, although during last decade's boom, they loaned 110 per cent.

The problem follows Auckland Council's revaluation of 516,000 properties in the country's largest residential valuation assessment.