My daughter took out a mortgage two years ago with a fixed rate of 3.05 per cent. This deal is due to end shortly.
We are worried because we discovered a problem 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 home more energy efficient – but the firm we hired said they could not do the work because she had spray foam insulation in the loft.
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The original survey was done by the mortgage lender and there was no mention of this.
Apparently many mortgage lenders will not lend on properties that have this foam, so it could make the property hard to sell or remortgage.
As her remortgage deadline is approaching, we fear she will be forced to stick with the same lender and possibly on an unfavourable rate.
From what we have read online the only way to rectify this situation is to remove the spray foam at a huge cost. What would you advise? Via email
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David Hollingworth replies: When taking a mortgage there are essentially two elements to satisfying 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 a suitable security for the mortgage.
This ensures that the property is worth what is being paid for it, and that its structure and condition is in good order.
That protects the interest of the lender in case the borrower can’t meet the payments, and the property ultimately ends up being repossessed.
Having the property valued gives the lender assurance that they would be able to sell the property and pay off the outstanding mortgage from the proceeds, if the worst did happen.
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Not all valuations are equal
As part of the application process a lender will therefore order a valuation.
In some cases the borrower may have to pay for this to be conducted, although plenty of 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 an in-depth report.
It may flag any obvious and major issues which could potentially help a buyer, but it is not designed to protect the interests of the buyer.
A valuation may not even always be a physical inspection of the property.
Although it’s more likely on a purchase than a remortgage, it is possible in certain circumstances that a lender will rely on an automated valuation or a ‘drive-by’ valuation, where the valuer visits, but doesn’t access the property.
It’s therefore generally advisable for the buyer to commission a second, more in-depth report, whether that is a home buyer’s report or a full structural survey.
The mortgage lender may have offered an option or suggested instructing a survey separately.
Both will be more expensive than a basic valuation, but will prepare a more detailed report to flag potential issues to the buyer.
That can be a cost well worth paying, as it could avoid surprises further down the line and help understand any likely maintenance requirements.
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In-depth: Mortgage lenders’ surveys don’t always involve someone entering the property, so home buyers are advised to get a second, more detailed report
What’s the problem with spray foam insulation?
Energy efficiency is clearly high on your daughter’s priority list.
Spray foam insulation is intended to help improve the energy efficiency of the property, a positive thing in this period of higher energy costs.
However, spray foam can potentially cause problems for a property if it traps condensation in the roof space.
This is of course more likely where it’s been incorrectly installed, and can ultimately result in the roof timbers beginning to rot if the roof can’t breathe properly.
As a result, lenders may not be keen to lend where it’s present.
That may be particularly true if the timbers have been completely encapsulated in the foam.
There may even be occasions where foam is used in an attempt to prolong the life of a failing roof.
However, not all lenders would necessarily rule out lending where spray foam is present.
They will want the valuer to assess the application of the foam, and whether it could impact the roof’s structural integrity.
It will help if your daughter has any certification of the work, along with any warranty that was issued at the point of installation.
Some lenders will simply rely on the comments of the valuer in deciding whether to lend, whereas others could be more black and white about their expectation.
Your roof needs to breathe: Spray foam can lead to rotting roof timbers if it traps condensation
It can be difficult for a valuer to assess the structure of the roof, so there may be a need for a specialist report.
This may not pose an issue for remortgage, when an application is unlikely to ask about spray foam and there may not even be a physical valuation.
Alternatively, your daughter may switch rates with her existing lender which would not require any valuation.
However, it would be much more likely to raise its head on sale of the property.
It’s worth revisiting the original valuation to see what type of valuation it was, and whether it recognised foam as present.
You could make contact with the surveyor that conducted the valuation but be prepared that it may have been outside of the report’s scope if it was a basic report for the lender.
They will have a complaints process if you wanted to pursue a complaint.
For peace of mind it could be helpful to carry out investigative work to ensure that the foam isn’t negatively affecting the roof structure, which could ultimately require a new roof if left unchecked.
Given the potential issues with spray foam, the Royal Institution of Chartered Surveyors (Rics) has a consumer guide which may be a useful starting point.
