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What is a mortgage valuation?

Kieran Witt, 18 August 2023


What’s this article about?

Learn what mortgage valuations are used for, when they happen, the cost, and what to do if the property is valued less than your offer.

A mortgage valuation is a type of survey your mortgage lender requests to help them confirm what a property is worth. It's also used to see if the property is suitable for a mortgage.

What to expect: Here, we answer some of your common questions:

  • What are mortgage valuations used for?
  • When are mortgage valuations completed?
  • What does a mortgage valuation cost?
  • What happens when a property is valued less than I've offered?
  • Do I still need to get my own survey?

What are mortgage valuations used for?

A mortgage valuation is used by your mortgage lender to confirm the price offered is reasonable and that the property is suitable for a mortgage.

Confirming the properties value

Mortgage lenders do this to reduce their financial risk. If you're paying over the odds for a property, it won't be valuable enough to clear the mortgage if you had to sell it. Lenders don't like this risk, so they'll adjust the mortgage offer based on this valuation.

Confirming the property is suitable for a mortgage

Mortgage lenders want to know that the property is suitable for a mortgage and doesn't represent an increased risk (spotting a theme yet?). For example, a property with no kitchen or toilets would, be deemed unsuitable for a residential mortgage because you can't live in the property, which is one of the conditions of a mortgage; it'll be your main residence. What is and isn't suitable for a mortgage will differ from lender to lender.

When are mortgage valuations completed?

They take place once an offer has been accepted and you or your mortgage broker has informed your mortgage lender they will want to arrange a mortgage valuation; they'll normally ask for the details of the Estate Agent selling the property and arrange it from there.

Today, there is so much data available on properties that it's common to complete a mortgage valuation without even visiting the property using something called an automated valuation model (AVM for short). A mortgage valuation takes between 1 and 2 weeks to be completed

What does a mortgage valuation cost?

This varies from lender to lender, but on average, they cost £100 upwards. Some lenders will have a special offer where they complete the valuations for free. However, this tends to be more common when remortgaging your home than buying a new one. Like most mortgage fees, you can include them in your mortgage instead of paying it upfront.

What happens when a property is valued less than I've offered?

Known as a 'down valuation', this means you're not able to borrow the amount you need for a mortgage, and so you're left with 4 options, these are:

  1. Challenge the valuation Some lenders will allow you to challenge the valuation if you don't think it's right. If you're using a mortgage broker, you can ask them to do this for you, and they'll more often than not offer their professional opinion on whether challenging is likely to be successful. If you're not using a mortgage broker you can contact your lender yourself.

  2. Renegotiate the sale price An independent mortgage valuation is a very credible piece of information. You can leverage it to get the estate agent and the seller to consider reducing the sale price. After all, if you back out because the sale price is too high, the seller will likely have the same challenges with their next buyer.

  3. Increase your deposit to make up the difference This can be risky, but it's still an option if you have the cash and love the home. Just keep in mind you're taking on the additional financial risk that the lender was unwilling to. You should only consider this after you've exhausted the options above.

  4. Back out of the sale Always an option and a hard one to make, but if all other options have been explored, this may be the last option available to you.

Something else to be aware of when renegotiating the sale price or increasing your deposit is that your mortgage interest rate may change. Your mortgage broker or lender will keep you in the loop should this happen.

Do I still need to get my own survey?

YES! A mortgage valuation is not a full survey; it also hasn't been completed for your benefit. It's there to protect the mortgage lender's interests, so you should get your own private survey completed.

It's also common for mortgage valuations to be completed without anyone ever visiting the property you're buying, so how could they truly know its condition and alert you of any issues that you may need to fix? Not sure what type of survey you should get? Check out the different options here