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What is a Mortgage Valuation?

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A mortgage valuation is a basic inspection of a property you’re looking to buy. It’s carried out by a mortgage lender, assessing a home’s location and condition to determine its value. 

It is not the same as a homebuyers or structural survey. Here’s everything you need to know.

What is a valuation for mortgage purposes?

When you apply for a mortgage, a lender will need to assess the security of their loan and how much risk is involved. This involves looking at you (the applicant) e.g. your income, credit history and any debts.

However, it also involves looking at the home you’re looking to buy, namely how much the property is worth. It needs to be carried out to validate the loan and ensure you can afford a mortgage

Before this, it’s worth using a mortgage affordability calculator, considering your ingoings and outgoings. If you can’t keep up with repayments, your home may be repossessed.

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What is a mortgage valuation report?

This valuation applies to anyone who needs to use a mortgage when buying a property or those who are remortgaging. Your lender will instruct a surveyor to carry out the valuation and produce a report.

Working with a mortgage adviser is key to ensuring you find the right mortgage deal. If you need help finding the right mortgage our recommended mortgage adviser offers fee-free advice for most customers!

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Your home may be repossessed if you do not keep up repayments on your mortgage.

What’s involved in a mortgage valuation?

Note: this report is for the lender’s benefit. It looks at property location and cost when working out its value. 

The Royal Institute of Chartered Surveyors (RICS) has identified different valuation surveys that can be carried out, depending on your lender’s appetite for risk. These depend on the type of property, its condition, and any special features.

Some things they might look for include:

  • How its price compares to similar properties in the local area
  • The condition of the property (brief inspection)
  • Whether its a traditional or non-traditional construction
  • Whether floor plans are accurate

How much does a mortgage valuation cost?

It’s more than likely that the basic mortgage valuation will be free. Some lenders charge but the majority do not.

Lenders use their own panel of surveyors, it’s not for the buyer to source and book. 

How long does a mortgage valuation take?

A physical survey itself will usually be a number of hours, or a day (depending on the size of the property and the survey type). Then, the lender should receive the report within 2 working days. 

However, should any issues arise from the report, or there are any delays, it can be longer than this. Buying a house is a process that can be fraught with difficulties and notorious for dragging out longer than expected. 

It’s worth keeping in mind that buyers don’t see the valuation report. It’s just for the lender, however, sometimes lenders do ‘desktop valuations’. These are valuations performed without a physical inspection of a property.

Surveyors will value a property based on the information in regard to location and condition as well as previous sales etc. If there is enough confidence in their data they don’t need to visit.

Sometimes the surveyor will just drive past the house, make sure it’s still there and complete the valuation without entering. Drive-by’s don’t happen that often but might on occasion, be a requirement of a lender.

What happens next?

The surveyor will give their opinion to your mortgage lender on whether they agree with the purchase (or remortgaging) price.

After that, you can expect a response within 5-10 working days. Bear in mind this may also be delayed, as the processes involved in buying a property often are.

What’s a down valuation?

A down valuation is when the surveyor concludes a property is worth less than the agreed purchase price, or proposed remortgage value. 

Property value affects how much a lender might be willing to lend you. For example, say the property asking price is £300,000 and you have a 10% deposit, you’ll need £270,000 from your lender to buy it. 

However, if the surveyor concludes the property is worth £250,000, this will throw all calculations off sync. The lender may therefore not lend you the full amount you need to buy the property. 

If the surveyor finds the property is too risky for a loan, you may find your mortgage is declined

If you get a down valuation you can then use this to negotiate with the seller, and it could turn into a positive.

If looking for a ‘riskier’ property (e.g. a flat above a shop), avoid the chance of a down valuation or decline by finding a mortgage adviser with specific experience in this area. They’ll be able to advise based on your individual needs.

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Your home may be repossessed if you do not keep up repayments on your mortgage.

What are the different types of survey?

It’s important to be aware that a valuation is not the same as a full structural survey. It’s about safeguarding the lender, their loan, and what would happen if you fell behind on repayments on your mortgage.

So, even if a surveyor gives the green light to the lender, you could run into nasty surprises once you’ve parted with your money.

There are many types of survey you can get which will identify if there are any issues with the property that could cost you later down the line. After all, you wouldn’t buy a car without looking under the bonnet – the same rule applies!

Each survey has different depths:

RICS homebuyers report 

This home survey provides a comprehensive report on the property itself, looking at potential problems such as:

  • Rot
  • Mould
  • Subsidence
  • Damp

If necessary, you can use the findings to help you negotiate a house price lower, or decide to continue your search to find a new home. There are two types of report – one with just a survey and one with a valuation. 

Buildings survey

Also known as a full structural survey, this is the most in-depth type you can get. This property survey is recommended for older properties or fixer-uppers. It’s also the most expensive. 

New-build snagging list

If buying a new build, you can get a surveyor to put together a snagging list also. Get a quote from a local surveyor below.

Find a Local Surveyor

Tip for home buyers

It’s recommended you get buildings insurance from the moment you exchange contracts (not moving day!) as you become legally responsible for the property and therefore liable for any damage.

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Need mortgage advice?

Finding the right mortgage adviser is absolutely key to a successful purchase. Find mortgage deals that suit your specific needs by connecting with our panel of trusted experts. Our recommended mortgage advisers have a 5-star Trustpilot rating from over 5,000 reviews! Get in touch below.

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Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge if you remortgage.

Last Updated: December 19th, 2022