A property valuation or mortgage valuation is an assessment carried out by a mortgage provider to check the property is worth the amount of money that the loan is based on.
Key points on the valuation are:
The mortgage provider will usually arrange the valuation. The terms of the mortgage will make it clear if you pay for this, or if the mortgage provider covers the cost.
They are carried out by qualified surveyors, or using the Automated Valuation Model (AVM). The AVM is a software based tool used to determine property value using statistical modelling and databases to determine the property value.
If the valuation comes back with a lower value than what you have offered, this is known as a down valuation. For example, your offer of £110,000 is accepted on a property, but the valuation only thinks the property is worth £100,000. The provider will lend based on £100,000, so if you had a mortgage based on a 10% deposit, you could only borrow £90,000, so you need the additional £10,000 on top of your deposit. Some lenders may allow you to challenge the valuation.
We mentioned a
survey in the
Upfront Costs Section. A survey goes into more detail, and reports on the condition, and depending on the survey, the market value of the property. It is not essential, but it does give you further assurance of the condition of the property. You can find a surveyor on the Royal Institute of Chartered Surveyors (RICS) website at the link at the end of the page. The types of survey are:
- Building or full structural survey - the most detailed (and most expensive) survey.
- RICS Condition Report - the most basic (and lowest cost) survey.
- RICS HomeBuyer Report - a more detailed inspection inside and outside the property.
The Home Report (Scotland). In Scotland, the seller must provide you with a copy of the Home Report, unless it is a private sale, or is a new build property. The Home Report includes a survey, but you may still wish to get your own done. The mortgage provider will most likely want to know the assessed market value of the property in the Home Report. They may still do their own valuation, or they may see the Home Report as sufficient.
