Mortgage lenders will often request a property valuation before they agree to a new loan. There are a range of reasons why a lender might need a valuation, from new property sales to remortgaging.
Here’s a guide to mortgage valuations so you know exactly what to expect.
What is a mortgage valuation?
A mortgage valuation is when a lender carries out a valuation of a property prior to confirming a new loan. Mortgage valuations are a safety net for the lender – they ensure that a property is worth enough to cover the value of the mortgage loan.
When is a mortgage valuation needed?
There are a few reasons why your lender might need to carry out a property valuation.
Moving home
The most common reason for a mortgage valuation is moving home. This applies both to new mortgages and to portability transactions (where your mortgage is transferred from one property to another).
Applying to borrow more
Your lender might need to obtain a new mortgage valuation if you’re applying to borrow more money on top of your existing mortgage. To make it a secure investment for the lender, the value of your property must provide security for the increased loan.
Changing your mortgage deal
If you’re switching to a different mortgage deal, your lender might want a new valuation of your property.
What happens during a mortgage valuation?
Traditionally, the lender would send a property surveyor to visit your home and compile a report on its condition. However, the type of survey can vary based on the lender and the type of property. Increasingly, surveyors will value properties using online sales data and market knowledge, so they might not need to visit your property at all.
During an in-person valuation, the surveyor will look around the property and complete their report. They will identify any damage or faults that may affect the value of the property.
How much is a mortgage valuation?
Mortgage valuations can cost anywhere from £150 to £1,500, although some lenders offer valuations for free. Valuation prices can vary depending on the age and price of the property.
What happens after a mortgage valuation?
After your mortgage valuation, the surveyor will pass on their report to the lender. If the surveyor agrees with the value of your property, the lender is likely to make you an offer for the mortgage you’ve applied for. You can also receive a high mortgage valuation, which means that the agreed sale price is in fact below market value.
If the surveyor believes the sale price or proposed remortgage value is higher than the property is worth, you might get a down valuation. This can involve a lender giving you a revised mortgage offer, and often, can cause the property sale to fall through. Down valuations can also occur if there are any faults with the property condition.
Choice Mortgage Solutions provide professional, independent mortgage advice to help you find the best mortgage deal for your circumstances. Contact us today to discuss your requirements.