If you are looking to purchase a property and need a mortgage to do so, your lender will require a lender’s valuation.
House buying has all sorts of jargon and terminology wrapped up in the processes, so it’s important to know what all of them are really about. Here’s what you need to know about your lender’s mortgage valuation, and how it affects you as a buyer.
What is a mortgage valuation report?
The mortgage valuation report gives your lender some independent confirmation of the value of your property, to ensure their investment is well placed.
The valuation will also tell the lender if there are any major problems with the property which could affect its value. It will check the prices of similar properties in the local area, and that your property is not one of a type which they will not lend against, such as those in a high flood risk area.
What happens during the mortgage valuation?
Your lender probably already has a relationship with a surveyor, and will contact them themselves to arrange a suitable date for the survey. In most cases, this will take place within two weeks of your mortgage application.
The valuation surveyor will visit your prospective property, and will inspect for condition and any major problems. This whole process will take only 15 – 30 minutes and will only usually pick up on obvious, visible problems. Their report back to your lender is short, just two or three pages usually, and although you may receive a copy of it, it’s not particularly beneficial to you.
What is the valuation fee on a mortgage?
Typically this will cost between £150 and £1,500 depending on the value of the property you are buying. Normally you, the buyer, will pay the fees for this valuation, this can be an upfront cost or added to the term of your mortgage. In some cases, lenders may waive these fees as part of a package of offers for you, but this varies from lender to lender. Check your mortgage terms and conditions early on, or ask your lender about survey fees, to make sure you know what you’re responsible for.
Don’t rely too much on a mortgage valuation
The mortgage valuation is commissioned by your lender, and is conducted for their benefit, not yours. The inspection is too brief and too standardised to really provide any insight into the condition or true value of the house. While you can certainly expect to receive a copy of the valuation report, or at least an excerpt of it, you should not rely on this to inform any offers you make or your purchasing decision.
In order to be fully informed about the condition of the property you’re considering purchasing, you will need to commission your own homebuyers survey. This is usually done through an RICS surveyor, who you can find on the RICS website.
What is in a homebuyers survey?
You have a choice of survey types available to you, to suit your needs as you see fit. These include:
The RICS condition report: The most basic report available, this is a quick, easy way to ensure everything is OK. It’s most suitable for relatively new properties.
The RCIS homebuyers report: A more detailed report, this will take around two to four hours to take place, and includes advice on any repairs or maintenance issues with the property.
The SAVA Home Condition Survey: This covers pretty much all the things the RCIS homebuyers report would cover, but without any market valuation included.
The RCIS building survey: This is the most thorough survey you can get, this is an ideal choice if you are buying a period property or something which needs a lot of work. It’s also a good choice for homes of a non-standard construction, and will generally take around a day to complete.
New build snagging survey: in addition to these survey types, if you are looking to buy a brand-new property, you can have a quick and inexpensive ‘snagging survey’ done. This flags up any defects, cosmetic issues and other problems, so that your contractor can rectify these issues before you move in.
Whatever your property valuation has said, you should always instruct your own thorough survey in order to ensure you are not hit with any nasty surprises later down the line.
If you’re ready to explore different mortgages and find one that’s right for you, give me a call. I’d be delighted to talk you through your options. Call 01252 759233 or email richard@thesurreymortgagebroker.co.uk
