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Valuations
An important part of the mortgage process for lender and borrower alike is the valuation. A valuation gives the lender confirmation that the property on which they are going to lend on is structurally sound and worth more than the amount they intend to lend the borrower.
There are three types of valuations.
Basic / Standard Valuation- This is a brief report is a valuation not a survey that will highlight any major defects about the property and assess whether it is suitable to lend on. The contract is between the valuer and the lender.
HomeBuyers Report / Property Check – Is a contract between the applicant and the valuer and is a more in-depth survey and valuation. It will highlight any urgent repairs and covers greater information about the general condition of the property i.e. drain covers lifted, advice on urgency of repairs.
Full Structural Report / Building Survey- Again a contract between the applicant and the valuer. This is a fully in-depth survey inspection and report. It covers property information, valuation advice, repair advice and bandings and many more other important facts about the property.
Obviously the more detailed the report, the more it will cost. Valuation charges are calculated on the purchase price or value of the property, not on the amount of the mortgage.
For the vast majority of us, our house purchase is the largest ever purchase we are likely to make and yet most of us choose the cheapest option available at a time when our cash is tied up elsewhere. In hindsight, perhaps we should invest more upfront into our biggest purchase.
For remortgages some mortgage lenders will arrange for a valuation as part of the mortgage product therefore reducing the cost to the prospective borrower upfront. However these valuations are generally only for the use of the lender and the applicant may not receive a copy of the report. In some cases the valuer will not even visit the property but may conduct either a drive by valuation or more recently will rely on a new automated valuation system called an AVM.
An AVM is a computer based valuation model that calculates the property value using many different types of statistical data already collected and verified such as Land Registry information and previous valuation information. It looks at such factors as location, type of property, previous house prices, comparable houses in the area etc when calculating the new valuation figure.
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