Valuing your home for mortgage or re-mortgage purposes
Getting an accurate valuation on your home is vital for a smooth purchase or remortgage process. In this article, we explain what a mortgage valuation is, how much they cost and how to avoid common problems. We are here to help, so if you have any further questions, use our local branch finder to contact us.
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What is a mortgage valuation?
A mortgage valuation is a type of survey that a mortgage lender undertakes. Mortgage valuations check that a property you are planning to purchase is worth what you are going to pay for it. Sometimes it’s called a valuation survey. It will to a large extent dictate whether the lender is prepared to offer the mortgage funds you need to complete the purchase.
Your mortgage lender may also carry out a mortgage valuation when you apply to remortgage the property you already own. This is to check that the property’s worth matches what you have submitted on the paperwork.
Although it might seem like mortgage valuations only really benefit lenders, it can also help to know if you’re paying too much or too little for a property. It is different from a house valuation because it is conducted in the interests of the lender, and is for the property that is being purchased, rather than sold.
What to expect from a mortgage valuation
At what stage is a mortgage valuation done?
A mortgage valuation takes place after you have agreed a price with the seller, and the property has been taken off the market. It happens after you have made your mortgage application, but before you receive a mortgage offer from the lender.
What do mortgage valuers look for?
A surveyor will conduct the mortgage valuation – however, it is not always done in person. If a lender knows the area you are buying in well, and has enough information available, there may be no need to visit the property. If the surveyor does an in-person survey, they will not ask to access the property – their valuation will be based on an exterior assessment.
They will look for things like non-standard building materials, or any structural issues that are visible and may affect the worth of the property.
What happens if a mortgage valuation is higher than your offer?
This is good news. This means that in the opinion of the mortgage lender, the price you are paying is less than what they think the property is worth. You’ve got yourself a good deal!
What happens if the valuation is lower than expected?
Usually your lender will agree that the sale price is a true reflection of how much the property is worth. But occasionally a surveyor may say the property price agreed between the buyer and the seller is higher than it is worth, and you are paying too much. This is called a ‘down valuation'.
What is a down valuation?
A down valuation occurs when a surveyor decides a property is worth less than the agreed sale price, or proposed remortgage value. This could mean the lender will need to review their mortgage offer and in some cases revise it.
Let’s say you want to buy a £250,000 property and have a 10% (£25,000) deposit. You will have requested a mortgage from your lender for the remaining 90% of the property’s value. But if the lender’s mortgage valuation surveyor reports the property is actually worth £200,000, your lender will only be giving you 90% of that amount, £180,000. That’s £45,000 less than you need to buy the property you want.
How can you avoid a down valuation?
Don’t panic if you are given a down valuation.
You can try an alternative lender that uses a different surveying company. This may get the valuation closer to your original agreed sale price, but there is no guarantee. Some lenders allow you to appeal a valuation, but this isn’t common.
There are few other things you can do to avoid a down valuation, before you even put in an offer:
- Research the property’s value
Look at how much properties in the area similar to the one you want to purchase have sold for over the past 3-6 months.
- Get an expert opinion
Choose a local estate agent, like haart, who has recently sold properties similar to yours to value your home. We can take a look at the property, offer insight into local market activity and use our experience to give you a suggested price.
- Make a realistic offer
Use your research to make a realistic offer on a property. Don’t be afraid to offer lower than the asking price if you know that other houses in the area are selling for much less.
How much does a mortgage valuation cost?
The cost of mortgage valuations are usually based on the price of the property, so can range between £150 and £1,500. Some lenders may offer the service for free.
Mortgage valuations v house surveys
A mortgage valuation is not the same as a house survey. A house survey is a service you pay for that comes in various levels of depth, which can point out potential issues that could affect your purchase or future resell value of the property. Be aware that even if you pay for a mortgage valuation, there’s no guarantee you will see the valuation report or find out what the surveyor has told the lender, so think about the level of risk you wish to proceed with.
There are four main types of survey, listed below with each progressively providing a higher level of detail:
- Mortgage valuation
- Condition report
- Homebuyer report
- Building survey/full structural survey
We would always recommend that buyers arrange for at least a Condition report.