Understanding Mortgage Valuations and Surveys. What Every Buyer Should Know
Buying a property is one of the biggest financial commitments you’ll ever make, and if you’re a home mover or first time buyer applying for a mortgage, your lender will almost certainly require a basic valuation or survey as part of the mortgage process.
There are a lot of options available for valuations and surveys so understanding the different types available can help you make informed decision when buying your home.
Mortgage Valuation
A mortgage valuation is carried out on behalf of the lender to confirm that the property is worth the amount they are lending against it and to make sure there is nothing of concern to the lender for example structural issues or damp.
It is not a comprehensive check and may not pick everything up however it is usually offered for free or at a small cost to you.
The lender will either do an in person basic valuation where they go inside the property to check it, or sometimes it’s done automatically or on a desktop by the bank or surveyor.
Why Isn’t a Mortgage Valuation Enough?
Many first-time buyers mistakenly believe that a mortgage valuation protects them against buying a property with defects. Unfortunately, this isn’t the case, if you want the property checking in more detail, sometimes your lender will allow you to upgrade the valuation to a more in depth survey or you can get an independent survey yourself.
To check which surveyors are available in your area, you can use the link to the RICs website below to search for local companies and obtain quotes…
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The two types of survey you can upgrade to/arrange yourself are
Level 2 Survey (Home Survey)
Previously known as the HomeBuyer’s Report
Choose this report if you need more extensive information whilst buying or selling a conventional house, flat or bungalow, built from common building materials and in reasonable condition.
The focus is on assessing the general condition of the main elements of a property. This intermediate level of service includes a more extensive visual inspection of the building, its services and grounds, but still without tests.
Concealed areas normally opened or used by the occupiers are inspected if it is safe to do so (typical examples include roof spaces, basements and cellars). The report objectively describes the condition of the different elements and provides an assessment of the relative importance of the defects/problems.
Level 3 Survey (Building Survey)
Choose this report if dealing with a large, older or run-down property, a building that is unusual or altered, or if you’re planning major works. It costs more than the other RICS reports because it gives detailed information about the structure and fabric of the property. This service includes:
- a detailed visual inspection of the building, its services and the grounds and is more extensive than a survey level two
- Concealed areas normally opened or used by the occupiers are inspected if it is safe to do so (typical examples include roof spaces, basements and cellars)
- Although the services are not tested, they are observed in normal operation – in other words, they are switched on or off and/or operated where the occupier has given permission and it is safe to do so.
The report objectively describes the form of construction and materials used for different parts of the property. It describes the condition and provides an assessment of the relative importance of the defects/problems. Additionally, it should:
- describe the identifiable risk of potential or hidden defects in areas not inspected
- propose the most probable cause(s) of the defects based on the inspection
- outline the likely scope of any appropriate remedial work and explain the likely consequences of non-repair; and
- make general recommendations in respect of the priority and likely timescale for necessary work
The surveyor may also be able to provide an estimate of costs for identified repairs if agreed with you in advance.
Which Survey Should You Choose?
The right survey depends on the property’s age, condition and your appetite for risk. Your mortgage adviser should discuss the options with you before applying for your mortgage.
Check out our first time buyer guide below for more tips on buying your home
