This guide was last updated 4 November 2022
Property purchase 101 – What is a Mortgage Valuation Report
When purchasing a new home, a mortgage lender is likely to ask you to pay for a Mortgage Valuation Report. Below, we explain what it is, why lenders require it before lending you money, and how much it costs.
A Mortgage Valuation Report is a particular type of assessment that a lender will carry out to validate a mortgage agreement. It is designed to assess their risk exposure.
When a mortgage lender; a Bank or Building Society, for example, lends money to a person to purchase property, it’s common practice to secure the financial loan against the asset which is being purchased. For example, the new home you want to buy.
When you agree to a mortgage loan, the lender has a charge over the property until you clear the debt and pay off the loan. This means that if you stopped making payments, and were unable to pay back the money that was lent to you, they will repossess the property to sell it and recoup their money.
In this scenario, the lender needs to be sure that they can sell the property for enough money to recover the original loan they lent to you. To ensure this, they will independently value the property themselves to ensure that it is worth more than what they intend to lend to you. They create what is known as a loan to value (LTV) ratio.
For example, you would like to purchase a property valued at £300,000. You have the required deposit and would like to
The report may not be very long – only a couple of pages at most. It is fairly high level but will list all the main details about the property, any comparable properties in the surrounding area, and the final valuation.
Ultimately the final report won’t be of benefit to you as you’ll need to view the property impartially. The lender will want to assess their risk on the property in the state it is when you purchase it.
They’re unlikely to be concerned about how much money you intend to spend on works and repairs, or what you will achieve on resale. For this, you will need to undertake a property survey. To understand which survey is right for your property, see our breakdown of each type of property survey to understand which survey is right for you.
It is likely that a lender will get you to pay to have a valuation report undertaken before your mortgage is approved, even though it may be of no use to you. The cost will depend upon the type and size of your property, however, you can expect it to be anything upwards of £150.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £495