Understanding Mortgage Valuations and Remortgage Valuations

Obtaining an accurate valuation for a property you intend to purchase or remortgage is crucial for a seamless transaction. In this comprehensive guide, we delve into what mortgage valuations entail, how they operate, and their associated costs.

What is a Mortgage Valuation and How Does it Work?

A mortgage valuation is a survey conducted by a mortgage lender to ensure that the property's value aligns with the proposed purchase price. This survey is essential as it determines whether the lender will approve the mortgage funds required to complete the purchase.

The same process applies when you are remortgaging a property you already own—a remortgage valuation verifies the property's current value against the submitted documentation.

While mortgage valuations primarily serve lenders, they also provide buyers with insights into whether they are paying a fair price. It's important to note that a mortgage valuation differs from a house valuation, focusing solely on the property being purchased and serving the lender's interests.

Mortgage valuation surveys can be conducted virtually (desktop valuation) or without a detailed inspection (drive-by valuation), depending on the lender's discretion.

Understanding Remortgage Valuations

A remortgage valuation mirrors a mortgage valuation but is conducted as part of the remortgaging process. This valuation establishes the property's current value when seeking additional borrowing against an existing property or switching to a new mortgage provider.

Comparing Mortgage Valuations and Home Surveys

Mortgage valuations should not be confused with property surveys. While surveys provide detailed insights for property buyers, mortgage valuations are specific to lenders, confirming that the property's value justifies the mortgage amount.

Cost of Mortgage Valuations and Remortgage Valuations

The cost of mortgage valuations is typically based on the property's price and ranges from £150 to £1,500. Some lenders offer this service for free.

Remortgage valuations are often included in remortgage fees or paid by the lender, costing between £300 to £500, depending on the property's value.

Preparing for a Mortgage Valuation or Remortgaging Valuation

Preparation for a mortgage valuation is minimal. Typically, the survey assesses whether the property's purchase price aligns with its value. Ensure you have any relevant property paperwork handy, such as New Home Warranties or External Wall System forms.

Drive-by and Desktop Valuations

Some mortgage valuations are conducted without a physical inspection. Drive-by valuations involve visual assessments from a distance, while desktop valuations rely on available data and tools like the Automated Valuation Model (AVM) to estimate property values.

Factors Influencing Mortgage Valuations

Several factors can affect a property's valuation, including non-standard construction, structural defects, dampness, subsidence, fluctuations in the property market, property location, size, layout, and type.

Dealing with Variances in Valuation

If a mortgage valuation is lower than the agreed sale price, renegotiation with the seller or challenging the valuation with your lender are potential options. In such cases, lenders may adjust the loan amount or require a higher deposit to proceed with the purchase.

Consulting with Just Mortgages

For expert advice on mortgages and to explore your options, reach out to our mortgage partner, Just Mortgages. Understanding your borrowing capacity and initiating the mortgage process early can expedite your property purchase.

For further inquiries or to discuss your mortgage requirements, contact Just Mortgages today.