The Facts about Mortgage Valuations
If you want to purchase a house and are planning to apply for a mortgage to make this happen, you can usually expect your lender to request a mortgage valuation survey, which is intended to check that the property is actually worth the price that you are planning to pay for it with the mortgage. If you own a property that you want to remortgage, this might also require a valuation survey to be carried out so that the lender has a clear idea of how much they can lend to you while minimising the risk to themselves by checking that the property is actually worth the figure that you have stated in the application.
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What is a Mortgage Valuation Survey? The Mortgage Valuation Report Explained
A mortgage valuation survey is generally carried out for the benefit of your mortgage lender. It is not the same as a house survey like a homebuyer’s survey and will only be carried out to double-check that the property is worth the asking price. Because of this, it has a limited scope, and you should not expect the mortgage valuation survey to provide you with any further information on the property such as whether there are any defects or issues. However, there are some benefits of having a mortgage valuation survey carried out for buyers since it will give you a clearer idea of whether you might be paying too much for your new home.
How Does a Mortgage House Valuation Survey Work – What is the Mortgage Valuation Process?
A lender will carry out a mortgage valuation survey in one of two different ways. Traditionally, surveyors visit the home to carry out an inspection and compile a short report. However, in the case of mortgage valuation surveys, the surveyor is more likely to conduct a desk-based survey, which does not involve visiting the home. Instead, they will check databases such as the Land Registry to compare the asking price of the property to the selling price of similar properties in the area in the past few months to see how they match up. In some cases, the surveyor might drive by the property to ensure that it is as expected.
When is an In-Person Mortgage Valuation Survey Carried Out By a Mortgage Surveyor?
The risk appetite of the lender will often determine whether or not a desk-based or physical survey will be carried out for the mortgage valuation. In most cases, lenders are happy to request a desk-based valuation, however, there may be some cases where the surveyor will be asked to go and take a closer look at the property. This is more likely to happen in cases of properties that are old or unusually constructed, or in situations where there is anything else that might cause an issue with lending. For example, properties that are constructed using unconventional materials are more likely to be assigned a surveyor visit since these may be more difficult to value using desk-based methods alone. Lenders might also request that the surveyor visits the property if there is not enough information about the property online, or if the lender has not worked in the area before.
Mortgage Valuation Survey: What Do They Look For?
What’s included in the mortgage valuation survey will depend on the type of survey carried out.
Desk-Based Valuation Report for Mortgage:
When the mortgage valuation survey is desk-based, this is usually s simple process that involves the surveyor conducting an analysis of local house price data using algorithms that provide automated valuations of properties based on the information available. Along with this, the surveyor may carry out a drive-by valuation, which involves simply driving past the property to check out the exterior and make sure that everything is expected. In this case, the surveyor will not need to actually enter the building at any point.
In-Person Visit For a Property Valuation for Mortgage
When the surveyor is instructed to visit the property in person, they will usually take between fifteen and thirty minutes to take a quick look around the property for anything that could impact its overall value, such as serious defects or problems. They will also take down and confirm key details about the property to report back to the lender, such as the number of bedrooms and bathrooms, garden, and parking space. Once they have visited the property, they will then look at three different sales transactions on similar properties in the local area that have been carried out recently, along with considering the current supply and demand of the local property market. They may also determine the minimum reinstatement figure, which refers to how much it would cost in total to rebuild the property completely.
How is a Mortgage Lender Valuation Different From House Surveys?
If you are in the process of buying a property, it’s important to bear in mind that the mortgage valuation survey is not the same thing as a house survey. The survey carried out by your mortgage lender shouldn’t be relied on to provide you with more information on the condition of the property or inform you of any defects that might have an impact on you later as the owner. This survey is purely for the benefit of the lender and will not always involve a visit to the property by the surveyor, which is why buyers should always arrange to have their own home survey carried out by an independent RICS surveyor.
There are three different types to choose from: condition report, homebuyer’s survey, and structural survey. The homebuyer’s survey is the most common option that is usually suitable for the vast majority of average properties. A condition report is less in-depth and is typically recommended for newer properties with no obvious issues. On the other hand, a structural survey is usually the best option to go for if you want to buy a property that is old, has serious obvious defects, or if you are planning major renovation work on the property in the future.
How Much Does a Mortgage Survey Cost?
Most of the time, lenders offer free valuations in order to market their service to new customers. However, if you are paying for a mortgage valuation survey to be carried out, you can expect to pay anywhere between £150 and £1500 depending on several factors, including the size and the estimated value of the home. The property’s asking price will usually have an effect on the cost of your mortgage valuation.
How Long After the Property Valuation Survey Will You Be Updated?
Once the mortgage valuation survey has been carried out by the surveyor, they will provide your lender with their professional opinion on the value of the property. If the surveyor agrees with the current asking price or the remortgage price for the property, the mortgage lender will usually go ahead and accept your mortgage application provided that there are no other issues.
On the other hand, a down valuation will occur if the surveyor decides that the property is worth less than its asking price. In this situation, the bank may provide you with a revised mortgage offer which is likely to be lower than what you initially applied for. If the seller does not agree to reduce the asking price accordingly, this could leave buyers with a shortfall that could result in the sale falling through.
What to Do if You Don’t Agree With the Lender Valuation or are Down Valued in the Valuation Survey
If you receive a down valuation or otherwise don’t agree with the valuation report provided by the surveyor, you are not alone – one in five homes in the UK are down valued by lenders. If you do not agree with the valuation provided by the lender, you may be able to challenge it. To do this, you will need to spend some time gathering evidence that you can use to make your case to prove the property is worth more than the valuation figure provided by the surveyor. Along with this, there are several things that you can do to avoid a down valuation on your property. These include:
Hire Your Own Surveyor: If you are selling a property and want to avoid potential down valuation problems with buyers in the future, it’s a good idea to hire an RICS surveyor to value your property rather than relying on the estate agent valuation alone, to get a more accurate figure.
Research the Property Value: Whether you are buying or selling, it’s a good idea to spend some time researching the property value. Check out the selling price of similar properties in the area that have sold recently, to get an idea of what surveyors are going to be comparing your property with.
A mortgage valuation survey will be carried out when a property is sold, to ensure that the lender is not putting themselves at risk by lending the buyer more than the property is worth.
