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What Do They Look For in a Mortgage Valuation?


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24th Nov 2022 (Last updated on 27th Mar 2024) 8 minute read

If you’re looking to buy a property using a mortgage, a mortgage valuation will need to take place on the property. This ensures the property valuation is correct. It helps to determine how much your lender is willing to let you borrow in your mortgage application.

A mortgage valuation and a house survey aren’t the same. It’s advised to have a house survey carried out before purchasing a property. This ensures there are no issues with the house's structure and integrity.

The mortgage valuation doesn’t go into this detail. It provides the lender with an idea of whether the true value of the property is in line with the offer placed on it.

In this article, we will be discussing the mortgage valuation survey and what do they look for during this process.

  1. Why Do I Need A Mortgage Valuation?
  2. Who Carries Out the Mortgage Valuation?
  3. Mortgage Valuation or Valuation Report?
  4. What Does A Mortgage Valuation Check?
  5. What Does A Mortgage Surveyor Look For?
  6. How Do I Prepare For A Mortgage Valuation Survey?
  7. Is A Mortgage Valuation Enough When Buying A House?
  8. What Do I Need to Provide For My Lender?
  9. Who Needs to See the Mortgage Valuation?
  10. What Happens if the Home is Devalued?

Why Do I Need A Mortgage Valuation?

If you want to buy a property using a mortgage, a mortgage valuation is necessary for the lender. While a mortgage valuation doesn’t directly benefit the buyer, it provides you with a better idea of what you will be able to borrow.

A lender requests a mortgage valuation to help decide whether they should approve the mortgage application.

The mortgage valuation is necessary and helps to calculate the property's Loan to Value (LTV). This provides the lender with an idea of how much they are willing to lend and the mortgage rates for a property.

Who Carries Out the Mortgage Valuation?

A professional and qualified surveyor will be required to carry out the mortgage valuation on behalf of your mortgage lender. The surveyor will visit the property and will carry out their own independent valuation.

Your mortgage lender will need to organise and arrange for the mortgage valuation to take place. While it’s better to hire the assistance of a professional surveyor, an Automated Valuation Model (AVM) can be used too. This will help to calculate the value of the property.

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Mortgage Valuation or Valuation Report?

A mortgage valuation and a valuation report are two separate types of reports. While they touch upon similar aspects, they serve different purposes. If you need a mortgage valuation, a valuation report will be unsuitable for this purpose.

Mortgage Valuation

As discussed, a mortgage valuation is needed for the lender to determine the worth of the property.

Valuation Report

A valuation report will help you to understand the value of a property. It’s best suited for those interested in selling their home as it provides a good idea of what value they can place the property on the market for.

Both types of reports are carried out by a RICS certified surveyor. For the mortgage valuation, a surveyor will likely visit the property. Often, this type of valuation can be completed online.

What Does A Mortgage Valuation Check?

A mortgage valuation will check the value of a property. It confirms the price of the property to the mortgage lender. They will then be able to compare this valuation to the amount requested for the mortgage.

The amount requested will be the amount of money the buyer and seller have agreed on. This may be higher or lower than the price stated on the mortgage valuation.

The amount stated on the mortgage valuation will be the highest amount the lender will be willing to lend towards a property.

If you’re looking for a buy-to-let mortgage, the mortgage valuation will consider the Loan-to-Value (LTV) of the property. The valuation check will display the potential for rental value with a buy-to-let mortgage. This can influence a lender’s decision when it comes to the amount a person can borrow.

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What Does A Mortgage Surveyor Look For?

This is to help provide them with a clearer idea of whether the property has been valued correctly. These will only tend to be any major issues that need to be flagged. Some of these issues will include:

  • Subsidence
  • Flooding
  • Damp
  • Mould
  • Structural issues
  • Electrical issues
  • External cladding
  • Short lease terms

If a surveyor notes any areas of concern affecting the property, a mortgage lender can decline the mortgage request. They can also request that the buyer pays for a specialist survey or report if there are any suspected issues. This can include a subsidence survey. After this has been completed they will continue with the mortgage application.

A mortgage lender will make you aware of any major issues that have been flagged. But, in general, a buyer won’t receive a copy of the mortgage valuation report.

While it’s better for a surveyor to inspect the property before providing a mortgage valuation report, this isn’t always necessary. This is because a lot of the information can be found online.

The information a surveyor will use online includes recent sales data. Often this can provide enough information about the value of a property. However, an in-person visit to the property is recommended.

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How Do I Prepare For A Mortgage Valuation Survey?

As a buyer, there’s nothing you can do to prepare for a mortgage valuation because the valuation is of the house you’re looking to buy.

If you’re the seller, there are some things you can do to prepare your home for a mortgage valuation survey.

While the mortgage valuation isn’t for the benefit of the seller, if the valuation is lower than your asking price, this can affect the property sale.

Here are some things you can do to help with the mortgage valuation:

  1. Clean your home - While a mortgage valuation isn’t extensive, you will still want to ensure your house is clean and welcoming.
  2. Clear your garden - You should also clear your garden so it is tidy and presentable. An unclean garden can affect the valuation.
  3. Fix any issues - If there are any issues with your property, such as broken light fixtures or holes in the walls, this will affect the mortgage valuation. As a result, you’ll want to fix these before the surveyor visits.

The mortgage valuation will take place after the seller has had their initial valuation. As a result, sellers will want to ensure the property is in the same condition as it was originally. This provides the best opportunity of keeping the current market value of the property advertised by the estate agents.

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Is A Mortgage Valuation Enough When Buying A House?

A mortgage valuation isn’t enough when buying a house. It’s recommended to have a property survey carried out to ensure the property you’re purchasing is in a good condition.

In Scotland, the seller is required to pay for and undertake a Home Report. In the rest of the UK, it’s the home buyer’s responsibility to pay for a survey.

There are three types of surveys you can buy. The option you choose will depend on the type of property you purchase. Here’s a quick breakdown of the different surveys:

RICS Home Survey Level 1 - Condition Report

The Condition Report is the least detailed RICS Survey that can be carried out. It’s best suited to new and conventional properties and properties without previous issues.

While the condition report will cover major issues with the property, it’s not heavily detailed. It won’t pick up on anything other than major and obvious issues.

RICS Home Survey Level 2 - HomeBuyers Survey

The HomeBuyers Survey is far more detailed than the condition report. It’s best suited to conventional properties less than 50 years old.

This report provides a good idea of the condition of a property and will flag any major issues with the property.

Services such as water supply and gas are looked at, and you will receive an outline of the condition of the property. Advice and valuations are not given with this survey type.

RICS Home Survey Level 3 - (Building Survey)

If you want a detailed full structural survey for your property, a building survey is recommended. It’s suitable for all property types and is particularly recommended for older or unconventional homes.

This survey is detailed and will look at the materials used in the building construction along with the general structure and condition of the property. It can contain cost considerations and areas of improvement.

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What Do I Need to Provide For My Lender?

You will need to provide the address of the property to your lender so they can arrange for a surveyor to check the property details and arrange a visit.

They may be required to see a Structural Defects Warranty and an External Wall System form from the seller too.

Information such as the prices of similar property types and previous sale prices can be found online by the surveyor.

Who Needs to See the Mortgage Valuation?

As the mortgage valuation is undertaken purely for the lender’s purposes, they are the only ones that need to see the findings of the report. As a buyer, you can request to see the details of the report.

If any major issues are noted, the lender will make the buyer aware of this. It can potentially affect the mortgage valuation costs and the mortgage deal.

What Happens if the Home is Devalued?

In some instances, the mortgage valuation may be lower than the amount you were initially going to borrow from the lender. If the surveyor devalues the house, this will impact the amount of money the lender will lend, and they won’t provide anything above the mortgage valuation amount.

There are three options to consider if this happens. You can either increase your deposit to make up the deficit, you can choose to begin the process again with a different lender or you can pull out of the process.

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