• Chris Warner

The different valuation types used in the mortgage application process

Many of our clients, especially first time buyers, are unsure of the different valuation types that are available or commonly used in the mortgage application process.

I wanted to try to clear this up with a quick and simple explanation of the different types of report and how they are used by clients and lenders alike.

The most common valuation report used is a basic mortgage valuation. These are instructed by the lender and normally paid for by the client, as part of the mortgage application. (It is prudent to note here that there are more and more free valuation offers in the market at present, these will all be a basic mortgage valuation too). A basic mortgage valuation is a report generated by a qualified RICS valuer (NOT and estate agents opinion, these are not the same thing and commonly confused) visiting the property to view and inspect it for any signs of potential issues to the structure of the property and also to provide an accurate market valuation figure to be used when assessing if the property is suitable for mortgage purposes. The valuer will also potentially recommend further reports or investigations if he notices any issues. These can be things like a timber and damp report if mould or condensation issues are prevalent. An electrical report if the fuse board or wiring is old and lastly a full structural survey if there are any concerns surrounding the actual structure of the property (see below for information full structural reports). The lender does not have to provide you with a copy of this basic mortgage valuation report even though you may have paid for it.

The second option available is another type of valuation report called a Homebuyers report. This is a more in-depth assessment of the property and may provide you with room measurements and items for repair or further assessment are flagged up in the report. This would normally be on a traffic light system, red, amber and green depending on the severity of the item requiring attention. For example, if the guttering was leaking then the report would show this a red item needing urgent attention. If there is a crack in a window, then this may be considered an amber issue where they are highlighting the issue to you but it is not urgent in nature. You will receive a full copy of the report for you to review. The report will also provide any risks or issues for your legal advisers to be aware of.

Lastly, the third type of report used is a full structural survey. These are used when there are concerns around the structural integrity of a building either by way of movement and cracking in the walls, potentially subsidence issues or extensions to the property not being built properly. These types of issues will also normally make a property not suitable for mortgage purposes and the mortgage application can be declined if the issues are current or ongoing. If any issues highlighted are long standing and not progressing further then they can still be considered suitable for lending.

Miscellaneous reports can be requested by the valuer to assist in the preparation of his report, these have been mentioned earlier and can be, but not limited to, a timber and damp report (this is a report investigating any issues seen regarding any damp or mould issues and/or any timber problems, like woodworm, for example). An electrical report, this would investigate the fuse board and wiring in the property and provide an estimate to rectifying any issues. A local report for mining or other local issues which vary from county to county, legal advisers will normally be aware of any local issues from their searches too.

I hope the information above gives you an insight into the reports available and how and why they may be used or requested during the mortgage application process.

If you have any queries please do feel free to get in touch

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