Mortgage Valuation Surveys

The mortgage application process can be a bit daunting for anyone going through it for the first time. There’s a lot more involved than many people realise; it’s not just a case of filling in a couple of forms and showing the lender your payslips. Before any lender agrees to provide a mortgage, they will want to survey the property to ensure it is valued correctly and that its value will cover the amount they are lending to you in the event of a default.

Mortgage valuation surveys sound much more intimidating than they actually are. The whole process should be straightforward and painless for most homeowners. This article covers all the essential information that home buyers need to know beforehand.

What is a mortgage survey?

mortgage surveyWhen buying a property using a mortgage, most mortgage providers require you to undertake a mortgage survey before they will agree to lend to you. This survey enables the lender to establish whether the property’s value is sufficient to cover the amount they are lending. The outcome of this survey could ultimately determine whether they agree to provide a mortgage and the terms offered.

The simplest mortgage survey definition is that it’s an assessment of a property’s value and the risk of lending money against it.  But mortgage valuation surveys are more complicated than this and can take several different forms.

The survey is usually relatively brief, often taking 20 minutes or less to complete. The results of the survey are combined with other data points, including information about other comparable properties in the local area, and sometimes a reinstatement value is also calculated to be used are part of the building insurance process. However, in some cases, mortgage providers will conduct their valuations remotely, using online data to determine the property’s expected value based on other property values in the local area.

Mortgage valuation surveys are undertaken for the benefit of mortgage lenders; in many cases, the homebuyer doesn’t even receive a copy of the report. Mortgage surveys enable mortgage providers to make an informed decision about whether to lend funds to a homebuyer or not. The reports will highlight any deficiencies in the property or other factors that might impact its value or affect the security of the loan.

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What does a mortgage valuation survey involve?

mortgage valuation surveyThere are several methods that lenders can use to determine the value of properties. The standard practice used to be for a surveyor to visit the property in-person and compile a short report. However, surveyors are increasingly opting to conduct valuations remotely, especially in light of the covid-19 pandemic. Some lenders will determine the value of a property using available sales data and looking at the value of other similar properties in the local area. It’s difficult to predict the exact method any individual lender will use.

The Royal Institute of Chartered Surveyors advises that the type of survey lenders use will be determined by their risk appetite. Some properties are inherently riskier or more likely to be risky than others. Among the numerous factors that lenders consider when deciding how to value a property, the type of property and nature of its construction are among the most important. Properties constructed from non-standard materials, such as concrete, are more likely to require an in-person assessment.

If a lender hasn’t lent against homes in an area and there isn’t enough data available to guide their decision-making, they are more likely to use an in-person assessment to determine the risk and value a property represents.

However, things have changed in recent years. Many lenders now offer free valuations to prospective borrowers. Mortgage lenders naturally want to keep their own costs as low as possible when undertaking free valuations. Sending someone to inspect a property in person is much more expensive than conducting a remote valuation using online information.

Irrespective of how lenders conduct their evaluations, the mortgage property survey results will influence the lenders’ decision-making.

How long after a survey will I get a mortgage offer?

The purpose of the mortgage valuation survey is to satisfy a lender that your property is priced correctly and in suitable condition for you to take a mortgage out against it. Assuming that the lender is satisfied with the results of the survey and happy to lend to you, it shouldn’t take long for them to put forward and offer. The average waiting time between completion of the survey and an offer being made to your solicitor or legal representative is five working days.

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If the survey reveals any problems with your property or its valuation, the lender will usually either share the report with you or at least offer you a summary of the key points that have informed their decision.

How to prepare for a mortgage property survey

Arranging a mortgage valuation survey is an integral part of the mortgage application process. Whenever you buy or sell a property, you will need a professional to assess its value and condition. The results of this assessment will determine the price you ask for or offer. In the case of a mortgage valuation survey, the results can decide whether or not you’re able to proceed with the purchase of a property or not. It’s, therefore, worth knowing what precisely assessors will look for during a mortgage valuation survey.

The first thing you should do to prepare yourself for the survey process is to read up on the different types of home surveys and how they differ. Mortgage valuation surveys aren’t as in-depth as other types of property survey.  Mortgage lenders can conduct valuation surveys entirely remotely without needing an assessor to visit your home physically. This contrasts with different kinds of survey where an in-depth assessment of the property’s state is required.

If the valuation survey is being conducted remotely, you don’t need to do anything to prepare for it. Your lender might ask you to provide some documents, data, or other information to help them make their decision, but they will source most of the relevant data themselves. If the lender is sending someone to conduct an in-person assessment of the property, you may be able to accompany them, although this is less likely while we are in the midst of a pandemic.

It’s worth doing your own research into local property values so you can get an idea of what a reasonable valuation looks like. If the lender comes back to you with a figure that is wildly out of sync with other property valuations in the area, you can question it with the benefit of evidence on your side. Don’t be afraid to challenge a valuation if you have good reasons to suspect it is incorrect.

Another crucial part of preparing for a mortgage valuation survey is giving due consideration to which lenders you will approach. You should take the time to see what other people have to say about individual lenders and try to find first-hand accounts from people who have used them. It’s good to do background research, but you shouldn’t let one bad review put you off, especially if it is an outlier in an ocean of praise and good feelings. Even the best businesses have at least a couple of bad reviews; no one gets everything right all the time.

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What does a mortgage surveyor look for during the survey?

One of the first questions many homeowners have about their mortgage valuation survey is what do they look for during the survey? Mortgage valuation surveys aren’t as in-depth as other types of home or property surveys, but the surveyors are looking to see if there are any defects in a property. Where lenders are satisfied they can conduct their survey remotely, they don’t generally visit the property to check for defects. They might have a surveyor drive past to confirm the place is in good condition, but even this is becoming rarer tanks to covid-19.

If there are any apparent indications that the property is in poor condition or suffering due to age, the surveyor might advise the lender to conduct a more thorough assessment of its condition. Over time, some properties will suffer from subsidence, where the property begins to sink into the ground. If the surveyor suspects your property is suffering from subsidence or similar issues, it can affect their final decision.

Mortgage valuation surveys are a necessary part of the mortgage application process. Fortunately, there isn’t a great deal for prospective buyers to do. In some cases, the valuation survey can even reveal issues with the property you were unaware of. For example, if a property is starting to subside with age, it’s worth knowing this before moving in.

When you’re researching your options and looking at different potential lenders, try to find information about other people’s experiences using them. Pay particular attention to their valuation process. The more you know about the process before you begin, the better. There’s nothing you can do to affect the outcome, but you can prepare yourself by researching the values of similar comparable properties, so you know what to expect.