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Mortgage Valuations and Surveys Explained

27th Mar 2024

Mortgage valuations and surveys are crucial components of the home buying process, especially for those seeking financing through a mortgage. They serve different purposes, but are both aimed at assessing the value and condition of a property. Let’s break down each one:

Mortgage Valuation

  • Purpose: A mortgage valuation is primarily conducted for the benefit of the mortgage lender rather than the buyer. It aims to determine whether the property provides sufficient security for the loan amount being requested.
  • Process: The mortgage valuation is typically a basic inspection carried out by a surveyor appointed by the lender. It involves a visual inspection of the property to assess its overall condition, size, and location. The surveyor will then use this information to provide an estimated value for the property.
  • Cost: The cost of the mortgage valuation is usually borne by the buyer but paid to the lender. It’s often a standard fee and tends to be relatively inexpensive compared to other surveys. Some mortgage providers may waive the fee at their discretion, so it’s worth checking when shopping around.
  • Outcome: The valuation report will provide an estimated value for the property. If the valuation comes in lower than the agreed purchase price, it could affect the amount of mortgage financing the lender is willing to offer. The buyer may need to renegotiate the purchase price or come up with additional funds to cover the shortfall.

 

Surveys

  • Purpose: Surveys are more comprehensive assessments of a property’s condition. They aim to identify any defects, structural issues, or potential problems that could affect its value or pose risks to the buyer.
  • Types: There are different types of surveys available, ranging from basic to more detailed inspections:
    • Homebuyer’s Report: This is a mid-level survey that provides an overview of the property’s condition, highlighting any significant issues that need attention.
    • Building Survey (Structural Survey): This is the most comprehensive type of survey, offering an in-depth analysis of the property’s structure, including potential defects and advice on necessary repairs.
    • Specific Defects Survey: This type of survey focuses on particular issues identified by the buyer or lender, such as dampness, subsidence, or roofing problems.
  • Process: Surveys involve a thorough inspection of the property, conducted by a qualified surveyor. The surveyor will assess both the interior and exterior of the property, looking for any signs of damage, deterioration, or structural issues. They will then produce a detailed report outlining their findings, along with recommendations for any necessary repairs or further investigations.
  • Cost: Surveys tend to be more expensive than mortgage valuations, with the price varying depending on the type of survey chosen and the size and complexity of the property. Sometimes the cost is included in the mortgage arrangement fee, so it’s worth asking when researching the market.
  • Outcome: The survey report provides valuable information to the buyer, enabling them to make an informed decision about whether to proceed with the purchase, renegotiate the price based on any identified issues, or budget for future repairs and maintenance.

While mortgage valuations focus on determining the property’s value for lending purposes, surveys provide a more detailed analysis of its condition, helping buyers make informed decisions and potentially avoiding costly surprises after purchase. It’s often recommended for buyers to consider getting a survey in addition to the lender’s valuation, especially for older or more complex properties.

At 3mc, we have a team of expert advisers who can discuss all your mortgage requirements. If you would like to discuss your options, give the 3mc team a call on 0161 962 7800.

All calls are recorded for training and monitoring purposes. 3mc for intermediaries only.

*Your home may be repossessed if you do not keep up repayments on your mortgage. 3mc (UK) Ltd is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register https://register.fca.org.uk/s/ under reference 302992. Please note: The FCA do not regulate Business Buy to Let Mortgages.