When you apply for a mortgage, your lender will carry out a valuation survey or mortgage valuation; this is to check the property is worth what you’re planning to pay for it. A mortgage lender may also want to carry out a valuation if you’re applying to remortgage. Overall a valuation survey is for the benefit of the lender and provides information for them to understand whether the property will act as viable security for the loan you’ve asked for. However, a valuation survey can also give you a rough idea of whether you’re potentially paying too much or too little for a property.
How do valuation surveys work?
Lenders conduct property valuations in a number of different ways. Surveyor may visit your property to compile a short report; however, these days many surveyors opt to value properties using recent sales data online and driving past the property. It’s hard to predict which type of survey your property will be subject to.
According to the Royal Institute of Chartered Surveyors (Rics), the type of survey you get is driven by the lender’s risk appetite. This can be based on the type and construction of the property; and whether there’s anything that may cause an issue with lending. The decision to do a physical visit could also be because the lender hasn’t lent in the area before; or it can’t find enough information about the property online. Regardless of the way the valuation survey is conducted, the lender will use the surveyor’s professional opinion on the value of the property to make its final decision on what size of loan it will offer you.
What happens after a valuation survey?
After a valuation survey, the surveyor will give their opinion on the value of the property to your lender. If the surveyor agrees with the sale or remortgaging price your lender is more than likely to offer you the loan you’ve requested. But if the surveyor suggests the price is higher than the property is really worth you might get a ‘down valuation’. Unfortunately, this could lead to your bank giving you a revised mortgage offer, which might scupper the whole purchase or remortgage.
Valuation Survey vs House Survey
A mortgage valuation is not the same as a house survey; and you should never rely on one to confirm whether the property is in good enough condition to buy. It’s a brief visit for the benefit of the lender, and often doesn’t involve anyone stepping inside the property. A home buyer’s report or full structural survey is much more rigorous and detailed; it can alert you to potential defects or other problems with a property before you buy. However it’s important to remember that a full structural survey doesn’t include a mortgage valuation survey. Some home buyer reports do come with a valuation but you should double check the survey is acceptable to your lender or you could end up paying for two.
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