Two-thirds of homeowners could be “wildly undervaluing” their property

78% of homeowners don’t have a clear idea of how much their property is worth, according to a Zoopla survey from March 2025. It’s estimated that around two-thirds of these households are “wildly under-valuing” their home because property prices have increased at a faster pace than they expect. 

Indeed, 35% of those surveyed undervalued their home by £100,000 or more, and almost a fifth did so by £250,000 or more. 

While the news that your property is worth more than you thought is positive, it might seem irrelevant in your current circumstances. After all, if you’re living in your home, there often isn’t a simple way to access property wealth without selling it. 

However, there are several reasons why knowing how much your home is worth could be useful. Read on to discover four of them. 

1. You might decide it’s time to move

Perhaps you’ve been thinking of moving home, but put off the idea because you didn’t think you’d have enough to purchase the property you want. Finding out that your current home is worth more than you think could change that.

Getting your home valued could open up new opportunities if you want to step up the property ladder. 

2. You could access a lower mortgage interest rate

If you currently have a mortgage on your property, the value rising could save you money. Typically, the more equity you hold in your home, the lower the interest rate you’ll be offered on a mortgage as you pose less risk to a lender.

There are two key ways to increase equity – make mortgage repayments or the value of your property rising. 

The loan-to-value (LTV) ratio is a way of measuring how much you’ve borrowed compared to the value of your home. As your equity increases, your LTV falls and you may be able to access a more competitive interest rate.

Indeed, according to Moneyfacts, at the end of May 2025, the best interest rate for mortgages with a 60% LTV was 3.84%. This increased to 4.47% for mortgages with an LTV of 90%. That might seem like a small difference, but it can add up over the long term.

Imagine you have a £250,000 repayment mortgage with a 25-year term. Assuming rates stayed the same throughout the term, if the interest rate was:

• 4.47% your monthly repayments would be £1,385 and you’d pay £165,486 in interest over the full mortgage term
• 3.84% your monthly repayments would be £1,298 and you’d pay £139,349 in interest over the full mortgage term.

So, in this scenario, the lower interest rate would save you more than £25,000 in interest over 25 years.

3. Your property could support your retirement goals

While property wealth is typically seen as inaccessible, in your later years it might become a useful way to fund retirement. 

Through equity release, you might be able to access some of the money that’s tied up in your home. You’d usually do this by taking out a lifetime mortgage. Unlike a traditional loan, the interest is rolled up and the total amount is repaid when you pass away or move into long-term care. 

As a result, equity release could boost your retirement income without increasing your expenses.

However, there are important downsides to equity release that are important to weigh up first. As you won’t be making loan repayments, the amount you owe can rise significantly, which may affect what you leave behind for your loved ones. 

In addition, equity release can make it more difficult to move and affect means-tested benefits.

If you’d like to explore if equity release could be an option, please get in touch. 

4. You could leave your loved ones with an unexpected Inheritance Tax bill

Finally, your home is often one of the largest assets you own and rising property prices might mean your estate could be liable for Inheritance Tax (IHT) without you realising.

IHT is a tax your estate pays after you pass away if the total value exceeds certain thresholds. With a standard rate of 40%, it could significantly reduce the amount you pass on to loved ones.

In 2025/26, the IHT nil-rate band is £325,000 – if the value of your estate falls below this threshold, no IHT will be due. In addition, if you pass on your main home to direct descendants, you may also be able to use the residence-nil rate band, which is £175,000 in 2025/26. 

If you’re married or in a civil partnership, you can pass on unused allowances to your partner. In effect, this means you could pass on up to £1 million before IHT might be due. 

Importantly, the thresholds for paying IHT are frozen until 2030. So, as property prices rise, more families are likely to need to consider IHT.

There are usually steps you can take to reduce a potential IHT bill when creating an estate plan. A financial planner could help you understand your options. 

Want to discuss your mortgage needs? Please get in touch

If you want to remortgage your current property or you’re looking to move to a new home, we could help you find a mortgage that suits your needs. Please get in touch to talk to us and find out how we could work together. 

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Think carefully before securing other debts against your home.

Equity release will reduce the value of your estate and can affect your eligibility for means-tested benefits.

A lifetime mortgage is a loan secured against your home. To understand the features and risks, ask for a personalised illustration. 

The Financial Conduct Authority does not regulate Inheritance Tax planning or estate planning.