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Mortgage guide

Mortgage valuation

What is a mortgage valuation?

Once you have applied for a mortgage, your lender will usually arrange for a mortgage valuation (also known as ‘valuation survey’) to ensure that the property you’re purchasing is valued at the price you are planning to pay for it.

This is not a condition survey, so it won't flag up details of any structural problems or maintenance work that the property needs.

What are mortgage valuations used for?

A mortgage valuation is used by the lender for the following:

  • Confirming how much the property is worth
  • Providing information on whether the property will be enough security for the loan you’re applying for

 

How much does a mortgage valuation cost?

Mortgage valuation fees can vary depending on the lender. Our standard mortgage valuation can cost from £250-£1,500 depending on the value of the property.

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What’s the difference between a mortgage valuation and a house survey?

A mortgage valuation determines the value of the property for the lender’s benefit to validate a mortgage, whereas a house survey is completed to assess the property condition and to identify any problems or cost of repairs to the potential buyer.

How do mortgage valuations work and what’s involved?

There can be several ways that lenders carry out property valuations.

The valuation is carried out by a surveyor, who would usually visit the property you’re buying and complete a short report.

However, there are some scenarios where the surveyor will use online data such as recent sales data, Land Registry details as well as local knowledge to make a valuation.

When the surveyor visits the property

  1. 01

    The surveyor may take around 15-30mins to look around the property and conduct the survey, looking for any damage that might affect its value and provide initial feedback to the lender.

  2. 02

    Once the visit is complete, the surveyor will make an evaluation of what the market value of the property is. They’ll look at historical sales of similar property transactions in the area and use their own knowledge of the current market.

  3. 03

    They may also provide information on what the ‘minimum reinstatement value’ is. This is the amount it would cost to rebuild the property from scratch, which can be useful to have when looking for buildings insurance cover during the home buying process.

How long after valuation to mortgage offer?

When the valuation has been completed this will lead to the mortgage offer which can take around one week (but can vary based on individual circumstances), if there aren’t any issues when the valuation has been received by the lender.

Does valuation mean the mortgage is approved?

A valuation being completed doesn’t mean the mortgage is approved, the valuation report can flag issues. For example:

  • The condition of the property e.g. general stability of the property
  • Property value being lower than the offer price

There can also be other requirements that may not be met, such as:

  • Applicant eligibility checks not matching the lender’s criteria e.g. affordability checks, personal circumstances changing since initial application.

What happens if the mortgage valuation is lower than the offer?

This is also known as a ‘down valuation’ and can happen when the surveyor values the property lower than the agreed price.

This may mean that the lender will only be prepared to lend based on a percentage of the purchase price or valuation (Loan to Value), whichever is lower.

If this happens, consider re-negotiating the purchase price or increasing your deposit to cover any shortfall.

What happens if the mortgage valuation is higher?

If you do find yourself with a higher mortgage valuation compared to the purchase price this tends to be because the purchase price is significantly lower than the market value.