A mortgage valuation is a brief inspection of the property arranged by the lender as part of your mortgage application. Its purpose is to confirm that the property is worth at least the amount being lent and that it is suitable security for the loan. It is not a detailed survey and is not designed to identify problems with the property.
The valuation is carried out by a surveyor appointed by the lender. In some cases, especially for straightforward properties, the lender may use an automated valuation model (AVM) based on data rather than a physical inspection. The result is either a confirmation of the property's value, a down-valuation (where the surveyor values it at less than the agreed purchase price), or a decline if the property is considered unsuitable.
Some lenders offer free mortgage valuations as part of their product, while others charge a fee that varies depending on the property value. A mortgage valuation should not be confused with a homebuyer report or structural survey, which are much more detailed inspections commissioned by the buyer.
You apply for a mortgage on a property priced at £275,000. The lender sends a surveyor who values it at £275,000, confirming it is adequate security. Your mortgage application proceeds to the next stage.
Key Points
- Arranged by the lender to protect their investment, not the buyer
- A brief assessment, not a detailed property survey
- May be a physical inspection or an automated desktop valuation
- A down-valuation can affect the amount the lender will lend
- Some lenders offer free valuations as part of the mortgage deal