There can a be a lot of confusion around what a mortgage valuation is and how it differs from a survey or report on condition. At Avery & Co we have tried to clear away the confusion and set out exactly what a mortgage valuation is, and almost as importantly, what it isn’t.
Mortgage Valuation – What it means.
A mortgage is a type of secured loan. Residential valuations are used by mortgage lenders to assess the suitability of a property for lending purposes. They ensure that the amount that a customer is borrowing can be secured against the value of their home, and therefore protect the lenders financial investment.
What a mortgage valuation is:
Based on a brief inspection by a valuation surveyor, or
Based on a desk top figure calculated by a computer model.
Used to assess risk and suitability of a residential property for lending.
Used primarily for the benefit of the mortgage lender.
What a mortgage valuation isn’t:
A guarantee that a physical inspection has been undertaken.
A survey or report on condition.
A report that should be relied on by a purchaser.
A report which provides any legal advice.
The mortgage valuation process is changing. To reduce costs and save time, many lenders are now relying on computer models to assess value rather than ask a valuer to inspect the property. This means that in an increasing number of cases, a physical inspection of a property may never be carried out. Because of the risks involved, these types of computer valuations are currently being used only in situations where the amount of mortgage lending is relatively low. However, as computer technology improves and house price data becomes more accurate, this trend is likely to become much more widespread.
The limited nature of a mortgage valuation has always meant that a purchaser will be provided with little or no information relating to the condition of the property. This situation looks set to worsen as lenders rely more and more on automated valuations based on computer models.
There is a widespread misconception amongst buyers and financial advisers that a mortgage valuation is a survey, and there is no need to obtain any further independent survey advice. This has never been less accurate. Regardless of this, there are an increasing number of situations where the lender is not providing their mortgage applicant with a copy of the valuation report, or even instruct a valuer to make a physical inspection.
Buying a house is the largest purchase that we will make and it makes sense to ensure that you have as full a picture as possible before making that investment. By using the services of a RICS Chartered surveyor, such as Avery & co. you will have the confidence that you are making a sound decision based on expert, independent advice. To book a Homebuyer Report – either with or without an independent valuation- or a valuation on its own for a Help-to-Buy or residential property, please do get in touch. We would be happy to chat through what you need and see how we can help to give you peace of mind during a very stressful process.