In This Guide
Apply for a mortgage
Buying at auction
Buying in Scotland
Conveyancing
Find and view
Negotiate
Plan your purchase
Success and failure
Surveys and valuations
1. Surveys
2. Basic mortgage valuation
3. Basic valuation example
4. Homebuyer's report
5. Homebuyer's report example
6. The surveyor's inspection
7. Full structural survey
8. Choosing surveyors
9. Complaints
To buy or not to buy
Surveys and valuations
Basic mortgage valuation
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A mortgage valuation is a process that the lender uses to determine whether or not a property represents a good investment. The purpose of the valuation is to compare the price of the property with those of a similar nature in the locality and to ensure that the amount you are borrowing is less than the value of the house. It also serves as a brief check on the location and general condition of the property and picks out any glaring disasters waiting to happen. The mortgage that is offered to you will be based largely on the results of the valuation, as the lender will not wish to lend you more money than the property is really worth.
The valuation is usually carried out by a mortgage valuer or chartered surveyor from one of a selection of firms that are regularly used by the lender for this purpose. As a rule, the valuer will be a recognised member of the main trade body - the Royal Institute of Chartered Surveyors.
Although it is often referred to as a survey, it doesn't go into nearly as much detail as a genuine survey would do. You will normally receive a copy of the report, but you will find that it is pretty brief and does not go into an awful lot of detail. The report arrives at the valuation sum having taken into account variables such as age, condition, area and the selling price of similar properties in the area.
Despite the main beneficiary of the valuation being the lender, guess who has to foot the bill? You do. Expect to pay anything from £150 upwards for the privilege of commissioning a report that you do not necessarily even have the right to read. The cost generally escalates according to the value of the property, as shown below. Some lenders will refund the cost of the valuation on completion of the mortgage transaction, but not all. As a rough guide, you can expect to pay £150 to £300 for a basic valuation.
It's not all bad though, as you do get some benefit of having a valuation done. If, for some reason, the property turns out to be unmortgagable then it is better to know sooner rather than later. The valuation may highlight some glaring fault that you had somehow managed to overlook. If the building does fail, due to being overpriced for one reason or another, then the lender will advise you as to why this is the case. If all goes well and the valuation is successful, at least you have a second, slightly pessimistic, view of the asking price.
A basic valuation is the standard requirement that you will need in order to get a mortgage. Over half of all homebuyers rely on the basic mortgage valuation as the only professional opinion of the state of the property they are buying. For your own peace of mind and financial security, it may well be worth investing in a more detailed check on the property, especially with an old property or one that has had some conversion work done on it.
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