What is a mortgage survey?
Most providers will require that you undertake a mortgage survey before lending is approved. The sole aim of this survey is to satisfy the lender that the property you are purchasing has enough value to cover the amount they are lending you.
The surveyor will briefly inspect the property (usually lasting less than 20 minutes). They then collate their findings with information about local, comparable properties. Sometimes a reinstatement value is also calculated. This can later be used as part of your building insurance.
Who Benefits from the Valuation?
A mortgage valuation survey is for the benefit of the mortgage lender. In some cases the home buyer may not even receive a copy of the report. It is to help the mortgage provider make an informed decision before agreeing to lend funds. The report is concise. It will only highlight major, obvious defects, which could have a significant effect on the property value.
What is the Surveyor Looking For?
As mentioned above, the purpose of the mortgage survey is to check the value of the property. This is so the lender can be confident that you are not overpaying for the property.
To build this valuation, the surveyor will be looking at the general state of the property. They will take note of any major issues such as subsidence, short-term leases, flooding, structural issues or external cladding.
If major issues are detected, the mortgage provider may lower the amount they are willing to offer or refuse to give you a mortgage altogether. They may also insist on further specialist surveys as a condition of your mortgage offer.
The amount stated on the mortgage valuation will be the highest amount the lender will lend the house buyer. If this is less than the price you have offered, you may need to reduce your offer.
How can I make a more informed decision?
Before buying a property, we recommend you commission an independent RICS building survey. According to research by insurers Direct Line, 8% of residential property sales go ahead with no form of survey on their property. However, a quarter of these later report unexpected property repair bills.
A home is probably the largest investment many of us will make in our lifetime. So it is perhaps surprising that so many would go into the process ‘blind’ and without taking good advice.
When you consider that most people spend just a few hours or even minutes looking around a potential new home before making an offer, the importance of seeking professional advice on the property’s condition is even more critical. Make sure you safeguard yourself from any nasty, and potentially expensive shocks once you move in.
Is a mortgage valuation the same as a home survey?
The main difference is that a mortgage valuation is for the benefit of the mortgage lender, whereas a home survey is for the benefit of the buyer.
If a prospective buyer is only interested in determining a property value, then we advise getting an RICS Valuation Report. This will give a more substantiated market value than a mortgage survey. There are three levels of home survey which will report on a property’s condition.
- Level 1 RICS Condition Report.
- Level 2 RICS HomeBuyer Report.
- Level 3 RICS Building Survey.
The latter Level 3 report is the most detailed and the only survey we at Chawton Hill carry out. This provides you with a full report, and if you would like it, a walk-round with the surveyor at the end of their visit.
If you would like a quote for your next home, please complete our Quick Quote form & one of the team will be back in touch straight away.