12 Sep The Difference Between a Home Report and a Mortgage Valuation
One of the most frequently asked questions we hear is “Will the Home Report include a Mortgage Valuation?”. Read on to find out the difference between them and to understand why most Home Reports won’t include a Mortgage Valuation suitable for the purpose of the buyers lender.
Mortgage Valuation Reports shouldn’t be confused with Home Reports which are carried out by Independent Chartered Surveyors. The Home Report in Scotland is required by law to be carried out by the person selling the property, and must be available to potential buyers. It is a report made up of three separate documents; Energy Performance Certificate, Single Survey and the Property Questionnaire. The Home Report provides significantly more information and detail about the condition of the property than a Mortgage Valuation Report.
The Home Report will provide the buyer with all the information they need to know about the condition of the property including any alterations which have been carried out along with a scale of 1-3 on any repairs which may need to be carried out immediately or in the future. The survey doesn’t typically include a valuation of the property, but a current valuation of the property can be included on request of the seller.
A Mortgage Valuation Report, as opposed to other types of survey, is intended only to give a brief inspection of the property, and a market valuation. Its scope is restricted by the fact it’s based on a limited inspection and a number of standard assumptions.
The Mortgage Valuation is for the benefit of the mortgage lender and is designed to give enough information for the lender to decide whether the property is safe to lend on, and up to what amount.
In addition to the Home Report, surveyors may provide a generic Mortgage Valuation Report that answers many of the questions that lenders will have about a property. This is not a prescribed document, but will be offered to sellers by the surveyor who carries out the survey. This may be useful in any discussions with lenders about a prospective purchase.
However, it is important to note that while you’re entitled to ask your surveyor to include a Generic Mortgage Valuation of your property, be warned that not all surveyors are on every lenders panel, so a lender may not accept the valuation. The Council of Mortgage Lenders (CML) currently has 113 members and 86 associates so it is not surprising that all surveyors are not on all the lenders panels.
You also don’t know which lender your buyer may use so there is a huge chance the Mortgage Valuation will have to be repeated. The buyer normally pays for the Mortgage Valuation as their part of the purchase process. The seller is not obliged to provide a valuation as this is predominantly for the benefit of the buyer.
Ensure that you understand this fully, as some estate agents may try to sell you this Mortgage Valuation as an ‘add on’ cost to the Home Report so think very carefully before being charged any additional fees. Also always ensure the surveyor you instruct to carry out your Home Report is RICS qualified.