Mortgage valuation (A guide)

In this brief blog, we will discuss what a mortgage valuation is and what to expect from a mortgage valuation.

Before you buy a house most mortgage lenders will carry out a mortgage valuation to determine the true value of the property you want to buy and determine if the valuation matches the price you want to pay for the property. A mortgage can be declined after a mortgage valuation due to several factors.

What is a mortgage valuation?

A mortgage valuation is a check carried out by a mortgage lender. This check is usually done before the mortgage lender will provide you with a mortgage offer but can be done after a mortgage offer has been provided. It is a very basic check that doesn’t go into much detail. A mortgage valuation will usually be your cost to bear and not the mortgage lenders.

 A mortgage valuation fee will vary based on the size of the mortgage and the type of property being mortgaged. The fee will usually be anywhere from £150 to £750 but can be substantially more. There are two main types of mortgage valuations; the in-person mortgage valuation and the desktop mortgage valuation.

For a mortgage valuation, the lender will hire a suitably qualified property surveyor to come and inspect the property to ensure everything is fine and this is a property the mortgage lender can lend on and possibly sell in the future without any potential loss of value. This is important to mortgage lenders as there is always the possibility they will have to repossess a property due to missed mortgage repayments.

The mortgage valuation will usually also have a minimum reinstatement value which the mortgage lender will give you so you can get a suitable buildings insurance which covers that amount as a minimum. Most mortgage lenders will want to see proof of your buildings insurance before allowing you to complete on the mortgage.

Some mortgage lenders will also offer a mortgage valuation as a free perk for you using them. This is most common when you are seeking to remortgage.

How long does it take for a mortgage valuation?

How long a mortgage valuation may take will depend highly on the type of valuation carried out. A desktop mortgage valuation will be carried out in seconds or at most a few minutes whilst an in-person mortgage valuation will take considerably longer and may even delay the mortgage as the mortgage lender may have to agree a time to visit the property with you and the property seller. The in-person mortgage valuation itself should take a few hours at the very most but can be completed in as little as 15 to 30 minutes.

From the time a mortgage lender instructs an in-person mortgage valuation to it happening, this could be as short as 1 day but is usually within two weeks.

What is involved in a mortgage valuation survey?

During a mortgage valuation survey( an in-person valuation), the property surveyor will look around the property and have a brief look around surrounding properties to try and get an idea of how much your property is worth and what surrounding properties should be worth. 

The property surveyor will also have compiled a report of the property price as well as surrounding property prices to compare and see if they are similar and if not, why they aren’t similar.

If your property has any unusual elements such as being in a commercial zone, having a shop below, next to or above it, being a non-standard construction property etc then you may find that the mortgage valuation will reflect this and the mortgage lender may decide not to lend to you due to issues selling the property if it is repossessed.

The process may differ in Scotland but this is usually how it goes in England, Wales and Northern Ireland.

Is a mortgage valuation the same as a survey?

No, the mortgage valuation is not the same as a survey. In fact, the mortgage valuation will not carry as much information as a survey such as repair suggestions, structural damage highlights etc. and although you pay for it is usually only for the mortgage lender to see and most mortgage lenders will not release this document to you upon request.

The mortgage lender will usually let you know if the property surveyor has flagged up any serious issues with the property and if you can challenge their opinions by carrying out a property survey and presenting it to the mortgage lender.

There are three main types of surveys

The home buyers survey which is the lowest rank
The buildings report which is the intermediate rank and
The full buildings report which is the highest rank

Does valuation mean a mortgage is approved?

A valuation does not mean a mortgage is approved. In fact, most valuations are simply carried out as part of the process of determining if the mortgage lender is willing to lend to you. After this is done you will usually get a mortgage offer.

If your mortgage valuation is carried out after you have already received your mortgage offer from the mortgage lender then yes, it may indicate that the mortgage process is nearing its end but it is by no means a guarantee that the mortgage is approved. A mortgage lender can still withdraw their mortgage offer at any point before completion.

This is why it is vital to use a good mortgage broker who can ensure your mortgage application and the whole mortgage process takes as little time as possible.

What are the types of mortgage valuation?

A mortgage valuation could be a desktop valuation. This is very common when you are remortgaging with the same mortgage lender or a new mortgage lender.

An in-person mortgage valuation is the second type of mortgage valuation. This mortgage valuation is more thorough and most mortgage lenders may reject your mortgage application after an in-person mortgage valuation as an in-person mortgage valuation will usually uncover more things for the mortgage lender to scrutinize than a desktop mortgage valuation.

Why can a mortgage be declined after a valuation?

Some of the factors which may cause a mortgage to be declined after a mortgage valuation are:

The property is overpriced

The property is significantly underpriced and the mortgage lender thinks there is mortgage fraud

The mortgage lender discovers some issues with the property after a mortgage valuation.

You fail further mortgage affordability checks.

What sort of issues or comments can be noted in a valuation?

Some of the issues that may be noted by the property surveyor when conducting a mortgage valuation include:

Property is overvalued
Property has structural issues
Built with concrete
Short lease term
Japanese knotweed
External cladding
Tree surgeons report

Should you get a full structural survey?

When spending hundreds of thousands of pounds to purchase a home, it is very important that we also ensure that the property we are about to buy is structurally safe and there are no serious issues with it which can be of a safety concern to us in the future or greatly diminish the properties value.  A full structural survey will give you that peace of mind for a few hundred quid extra.

Sample of a mortgage survey

Below is an image of what a sample report from a property surveyor who has just conducted a mortgage valuation will look like.

In this brief guide, we discussed what a mortgage valuation is. If you have any questions or comments please let us know below.

If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.

You can also contact the debt charity “Step Change” if you are in debt and need help.