Sellers' packs will not help new buyers get mortgage

"Purchasers will still have to pay a normal valuation fee so the cost saving for them is negligible." Ray Boulger of John Charcol By Madeline Thomas LONDON (Reuters) - First-time buyers will still have to pay for a full property valuation, despite government moves to ease their burden by introducing Home Information Packs (HIPs), lenders have warned.

From June 2007, anyone selling their home has to compile a HIP, costing around 700 pounds, that includes local authority searches, work guarantees and a Home Condition Report.

The Office of the Deputy Prime Minister, the department responsible for introducing HIPs, said they would speed up the home-buying process, provide greater transparency and cut costs for first time buyers by shifting the cost burden from buyer to seller.

However, the Council of Mortgage Lenders CML said this week that HIPs would not capture all the information buyers would need to agree a mortgage.

"In the majority of cases, lenders will still need a valuation report, for which there will be a separate charge," said a CML spokesman.

"For example, some 40 percent of all mortgages for house purchase have a loan-to-value ratio of 80 percent or more. In these cases, lenders are likely to require a separate inspection."

Ray Boulger, Senior Technical Manager with mortgage broker John Charcol, said on Thursday virtually all first time buyers had a loan-to-value ratio of 80 percent or more and would therefore have to pay for a full valuation to get a mortgage.

For a property priced between 150,000 and 200,000 pounds, Abbey would charge 295 pounds, Halifax 340 pounds and Nationwide 325. The higher the value of the property, the higher the charge.

"Purchasers will still have to pay a normal valuation fee so the cost saving for them is negligible," he said.

In some circumstances, mortgage companies accept cheaper desktop valuations -- that simply confirm the property does exist -- or driveby valuations -- that confirm the property is still standing and is therefore mortgageable.

However lenders said these were most commonly accepted in remortgage decisions rather than new purchases.

"Home Condition Reports provide information on the true condition and energy efficiency of the property. They are nothing to do with the buyer having to go out and get a mortgage and get a valuation," said a spokesman for the deputy PM's office.

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