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What is a mortgage valuation?

When applying for a mortgage, a major step will be the mortgage valuation. But what does it entail, and what effect can if have on your home buying process?

What is a mortgage valuation?

When preparing to buy a property, and applying for a mortgage, you will need to have your potential new home valued by a qualified surveyor as part of the mortgage application. But it’s important to note that whilst this is carried our by a surveyor, it isn’t the same as a building survey and it doesn’t protect you as the buyer if problems are found with the property when you move in.

To be clear, mortgage lenders will do a valuation, which a buyer pays for, but gets no protection from. It is for the benefit of the lender.

We recommend all buyers get an independent building survey carried out as well as the valuation. You should find out which of the different kinds of surveys you will need to get.

Your broker and lender will arrange the mortgage valuation for you.

What is a mortgage valuation?

A mortgage valuation an assessment by your mortgage lender of the value of the property. They will send a qualified surveyor, who may also be a valuation specialist, to value the property.

The aim of the valuation is to investigate what the property is actually worth, and if they should approve your mortgage. Your lender will use this to see if the property is worth the money you (and therefore they) are being asked to pay for it. The lender can then decide if they should offer you a mortgage on it.

If the valuation comes back as less than the agreed sale price, this is called a ‘down valuation’. Your lender may then decide not to give you the mortgage, or they will decide to lend you less than the full amount. They may also alter the interest rate.

Find out what to do if you get a down valuation as a seller or a buyer.

What will a mortgage valuation report?

Though it will be carried out by a qualified surveyor, a mortgage valuation is NOT a property survey. They will do a quick assessment of the property which may identify some condition issues such as damp or subsidence, but the report will be much less thorough than an independent survey.  

Remember, the valuer is only concerned with problems that might affect the protection of the mortgage lender’s loan. The lender simply needs to know that they can recoup their loan if they needed to. The report is done for the lender’s benefit, not yours. In fact, it’s likely you may never see the report yourself and if you find any problems when you move in, you have no recourse.

For this reason, you should never rely on a mortgage valuation alone to get a picture of the condition of a property. We recommend getting a proper, independent building survey to avoid buying a property with unexpected problems. If you are in Scotland, you will need to spend time looking at the property’s Home Report.

How long does a mortgage valuation take?

The length of time a mortgage valuation takes will depend on how it is carried out. Traditionally, a surveyor would physically go to the property and thoroughly inspect it to estimate its value. However, now there is also the option to carry out the valuation, in ‘drive by’ fashion, or carrying out an ‘AVM’ – automated valuation model – where the valuer reviews the property’s value online.

Typically, a mortgage valuation’s findings can be returned within a couple of weeks. But it may be slightly longer or shorter depending how thorough their investigation is.

How much does it cost?

A mortgage valuation can vary quite dramatically in price, as the cost is calculated according to the value of the home being assessed. The price will generally be somewhere within the range of £150-£1,500. So, it’s best try and budget for a more expensive valuation to be safe. However, your mortgage broker should be able to give you an indicator of the value of the property, or what your lender often charges, and therefore the cost of a valuation.

Be aware that you don't pick your mortgage valuer, and often the price is included with the other costs of your mortgage. the valuation will all be done through the lender, they have their own people. You won’t need to worry about setting it up, but you will be the one paying for it.

Some lenders do, however, offer valuations for free as part of their mortgage deal, as an incentive to pick them. Again, your mortgage broker can help you find a deal like this if it interests you.

Do I need a mortgage valuation?

Getting a mortgage valuation is necessary in securing a mortgage. Lenders will need to know that they are investing an appropriate amount of money in a property, and will not be willing to lend you money unless they believe the property is worth it.

It is important to remember though, that each mortgage lender will have their own criteria for what they are looking for to value a property. For instance, the use of certain materials may bring the value of a property down in one lender’s eyes but not in another.  Your mortgage broker will be able to advise you if they think there might be any risks.

To take advantage of free advice from mortgage experts, we’d suggest talking to Mortgage Advice Bureau. You can also read our advice on how to avoid getting a Down Valuation.


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