Mortgage Matters: What is a lender’s valuation?

Jul 26, 2024

When you’re buying a new home, it can feel like you’re trying to learn a new language. Your estate agent or mortgage broker might use some terms that you don’t quite understand, and you might find yourself asking for clarification (or sneakily looking up the phrase once you’ve hung up the phone).

One of these terms could be a lender’s valuation. It’s a strange-sounding phrase, but it’s actually quite straightforward!

A lender’s valuation is a property survey, ordered by your mortgage lender. This gives the lender an independent idea of the property’s value, which helps them to decide whether it’s a property that they’ll lend you the money for. 

When you make your mortgage application, you’ll need to pay for the lender’s survey. The lender will instruct a surveyor to begin the valuation, which can take up to two weeks. It’ll take into consideration the value of the property that you’re purchasing, the properties around it, and any damage or risks to the property that might have an impact on its value.

If the valuation returns a result with any significant risks or damage, such as the property being built in a high flood risk area or having serious structural concerns, then the mortgage lender may not approve your mortgage application.

This survey, however, isn’t a detailed one as it’s only for the lender’s benefit. This means that it might not include any necessary maintenance or other damage that you, as the buyer, may be required to fix. However, if there is any serious damage or risk reported, the lender may make you aware of this. 

To assess the property thoroughly and ensure that you don’t receive any nasty surprises, it’s advised that you book your own separate survey. Depending on the type of property and its age, this could be a HomeBuyer Report, a Building Survey, or a Full Building Survey. 

If the report that your lender receives from the surveyor looks positive, and confirms the expected value of the property, then your lender should be happy to continue processing your mortgage application – and you’ll be one step closer to becoming a homeowner.

by | Jul 26, 2024

The information contained was correct at the time of publication but is subject to change

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