Should you rely on a mortgage valuation?
If you are buying a property and require a mortgage, your lender will commission a mortgage valuation survey. This will be undertaken by a surveyor, and so it is tempting to conserve your cash and forego commissioning a full survey yourself, but can you rely on a mortgage valuation?
What is a mortgage valuation?
It is important to remember the mortgage valuation survey will be conducted solely for the benefit of your lender even though it will be you who pays the mortgage valuation fee. Your lender is only interested in establishing what the property is worth and whether there are any defects or features which would impact its value as security for your loan. The report will be brief and will mention only significant issues and the estimated value of the property.
A mortgage valuation involves a short inspection and may take just a few minutes. You might never see the report, as some lenders do not provide a copy to their customers. Even if you do get your hands on it, the two or three pages of information it contains will fall short of covering everything that you need to know.
You can’t rely on the mortgage valuation process to tell you if you are about to invest in a goldmine or a money pit.
The benefits of a survey
For peace of mind, and to avoid a potential financial disaster, it is always best to commission a survey of the property you intend to purchase. This should be carried out by a qualified surveyor and preferably a member of the Royal Institute of Chartered Surveyors (RICS) who will be covered by professional indemnity insurance. If the property is unusual or unique, choose a surveyor with specialist knowledge of that type of building. Not every surveyor will have inspected a castle or converted squash courts.
What type of survey should you commission?
The are several different types of survey and only you can decide the level of detail you need and how much you are prepared to spend. A condition report will be only marginally more informative than a mortgage valuation and may leave many questions unanswered.
A HomeBuyers Report will reveal most major problems, but the surveyor will not look behind furniture or lift the flooring. This type of survey will usually be accompanied by caveats limiting the liability of the surveyor, and so could prove pointless if you discover a serious issue with the property after you have bought it. This type of report can be commissioned to include a reinstatement value for the property, in other words, the cost of completely rebuilding it in the event of a disaster.
A Building Survey is the most comprehensive choice but also the most expensive. The surveyor will check every aspect of the property, internally and externally. A few days later, you will receive a lengthy report covering everything from structural issues to the proximity of Japanese knotweed. It will highlight any potential or existing issues and the necessary repairs. The report will also tell you what could happen if you don’t make the recommended repairs. Your surveyor should indicate the relative importance of each problem that has been identified and may provide estimates for the cost of the work required.
You can then make an informed decision as to whether you should proceed with the purchase. In addition, you will have the ammunition you need to negotiate a lower price for the property if the extent of the required work means that the previously agreed price is unrealistic.
The true value of a survey
If your survey reveals that there are no issues with the property, it can you leave you feeling that you have spent a significant amount of money for no good reason. On the other hand, if a major structural problem is revealed, you will be eternally grateful that you found out before it was too late. A survey is always a worthwhile investment because even relatively minor problems can end up costing you a small fortune to rectify.
It is vital that you buy your property at the right price and that you can afford to undertake any work which is required. A survey is the easiest way to obtain the information you need and could save you a great deal of heartache – not to mention expenditure.