A mortgage valuation survey is a brief report carried out by a qualified surveyor to inspect the property you’re looking to buy.
It’s specific to the property you’re looking to buy and gives the lender confirmation of the property’s current value, also taking into consideration recently sold prices of similar properties in the same area. It’ll also take into consideration any defects which may affect the property’s value. The lender needs to ensure they are not taking any risks lending on a property that may have structural issues or are above a shop/restaurant or in a state of neglect. The valuation is commissioned by the lender and paid for by you and is simply about confirming the value of the property. This is important to understand because it is unlikely that you will ever get a copy of it because the RICS surveyor is working for the lender, not you.
The objective of the valuation is to confirm the amount offered by you is a fair market value for the property; the bank wants to ensure that if they need to repossess the property, that they can sell it again quickly on the open market and be able to clear their mortgage charge. A mortgage valuation flags certain defects within a property that the Surveyor feels could affect the property’s value, however it is not a detailed defect report.
As mentioned, the mortgage valuation in not an in-depth report. It’ll be 2-3 pages maximum. When you make an application for a mortgage the mortgage lender usually wants to know the answer to 2 main questions:
Let’s quickly look at each of these two questions in a bit more detail.
From a lenders point of view, they purely need to know that they aren’t lending someone £150,000 for a house that’s only worth £80,000. If they ever have to repossess the property, they want to be sure they will get as much of their money back as possible. That’s the most straight-forward explanation but there are other factors to take into consideration like loan to value (LTV). They just want to know that the valuation you or the buyer has placed on the property is a true reflection of the property’s current value. To confirm this, they will look at the overall condition of the property, whether it has been has any renovations carried out or requires modernisation and whether the number of bedrooms declared is accurate considering building regulations. They will also be looking at comparables of similar houses that have recently sold in the area.
A mortgage valuation survey will check for obvious sign of structural damage, damp, problems with the roof, problems with wiring etc. however no floor coverings will be lifted and no readings will be taken. If any potential issues are obvious, the surveyor may recommend that a more detailed report (a specialist damp and timber report for example) be obtained by the mortgage company before approving the mortgage.
Generally, you will pay for the lender’s survey. The cost is based on the value and size of the property you are looking to purchase and costs typically £150 to £1,500.
If you are looking for a RICS qualified surveyor to carry out a property survey, get in touch today by calling us on 0131 608 0175, email us at email@example.com or send us a message online.