Mortgage Valuation & Property Survey Guide
Understanding the Property Before You Buy
Finding a property you love and having an offer accepted is an exciting stage of buying a home.
But an accepted offer doesn't necessarily mean the mortgage lender will agree that the property is worth the same amount — or that it considers the property suitable security for a mortgage.
It is also important to understand the difference between a mortgage valuation and an independent property survey.
They aren't the same thing.
A lender's valuation primarily protects the lender's interests. A survey is intended to give you more information about the condition of the property you're considering buying.
Understanding the difference can help you make better-informed decisions before becoming legally committed to the purchase.
What Is a Mortgage Valuation?
A mortgage valuation is an assessment used by a mortgage lender to help determine whether a property provides acceptable security for the proposed mortgage.
The lender wants to understand whether the property appears suitable for lending purposes and whether its value supports the amount being borrowed.
A mortgage valuation isn't necessarily a detailed inspection of the property.
Who Is the Mortgage Valuation For?
Primarily, the lender.
This is one of the most important points for buyers to understand.
Even where you've paid a valuation fee, the lender's valuation is being carried out for mortgage-lending purposes.
You shouldn't assume that it provides the same protection or level of detail as an independent survey commissioned for you.
How Is a Mortgage Valuation Carried Out?
The approach can vary depending on the lender, property and circumstances.
A lender might use:
A physical inspection
A desktop valuation
An automated valuation model
Another valuation method it considers appropriate
You don't normally choose which valuation method the mortgage lender uses.
What Is a Desktop Valuation?
A desktop valuation is completed without necessarily requiring a surveyor to physically inspect the property.
The valuation may use available property data, comparable transactions and other information.
This can make the mortgage valuation process quicker in appropriate circumstances.
However, it shouldn't be confused with a detailed physical survey of the property's condition.
What Is an Automated Valuation?
An automated valuation model, often referred to as an AVM, uses data and statistical modelling to estimate a property's value.
Some mortgage lenders may use automated valuations for suitable properties and applications.
Again, an automated valuation doesn't provide you with a detailed assessment of the property's physical condition.
Does the Mortgage Valuation Tell Me Whether the House Is in Good Condition?
Not necessarily.
A mortgage valuation may identify certain obvious issues relevant to the lender, but its purpose isn't to provide you with a comprehensive report about every defect in the property.
A property can receive an acceptable mortgage valuation and still have problems requiring significant expenditure.
That is why buyers should consider whether an independent survey is appropriate.
What Is a Property Survey?
A property survey is an inspection commissioned to provide information about the property and its condition.
The level of detail depends on the type of survey selected.
A survey can potentially identify matters that aren't obvious during a normal property viewing.
These could include concerns relating to:
Roofs
Damp
Timber
Walls
Structural movement
Drainage
Windows
Insulation
Alterations
General condition
Repairs and maintenance
The exact scope depends on the survey being undertaken.
What Types of Property Survey Are Available?
In England, Wales and Northern Ireland, residential surveys are commonly offered using RICS survey levels.
Broadly, these include:
RICS Level 1
RICS Level 2
RICS Level 3
The appropriate survey depends on the property and how much detail you require.
What Is a Level 1 Survey?
A Level 1 survey provides a relatively basic overview of the property's condition.
It can highlight significant visible issues but provides less detail than higher-level surveys.
It may be more appropriate for relatively straightforward properties in apparently reasonable condition where a detailed assessment isn't required.
However, the appropriate survey should be discussed with the surveyor.
What Is a Level 2 Survey?
A Level 2 survey provides a more detailed inspection and report.
It is commonly considered for conventional residential properties.
The surveyor can identify defects and areas requiring attention within the scope of the survey.
Depending on the service commissioned, valuation-related information may also be available.
Check exactly what is included in the survey you're purchasing.
What Is a Level 3 Survey?
A Level 3 survey provides a more detailed assessment.
It may be particularly worth considering for properties that are:
Older
Larger
Unusual
In poor condition
Extensively altered
Constructed using unusual materials
Being purchased with significant renovation plans
A Level 3 survey can provide more detailed information about defects, potential causes and remedial considerations within the scope of the inspection.
Which Survey Should I Choose?
There isn't one survey that's appropriate for every property.
Consider factors such as:
Property age
Construction
Condition
Previous alterations
Visible defects
Planned renovation
Your own knowledge of buildings
How much information you want before proceeding
Speak directly with an appropriately qualified surveyor if you're unsure which inspection is suitable.
Do First-Time Buyers Need a Survey?
Being a first-time buyer doesn't determine whether you need a survey.
The decision should primarily relate to the property and the information you want before purchasing it.
However, first-time buyers may have less experience identifying potential property problems.
An independent survey can therefore provide useful information before becoming legally committed to the purchase.
What Is a Down-Valuation?
A down-valuation occurs when the value accepted by the mortgage lender is lower than the price you've agreed to pay.
For example:
Agreed purchase price: £300,000
Lender valuation: £280,000
The lender may then base its mortgage calculations on the lower acceptable value rather than simply using your agreed purchase price.
This can affect the mortgage and deposit required.
Why Do Down-Valuations Happen?
A valuation can differ from the agreed purchase price for various reasons.
These can include:
Comparable local sales
Property condition
Market conditions
Unusual property characteristics
Limited comparable evidence
Surveyor's professional assessment
An estate agent's asking price, an accepted offer and a mortgage valuation don't necessarily represent the same thing.
What Happens If the Property Is Down-Valued?
You may have several potential routes depending on the circumstances.
These could include:
Renegotiating the purchase price
Increasing your deposit
Changing the mortgage structure
Asking whether the valuation can be reconsidered where appropriate evidence exists
Considering another lender where appropriate
Withdrawing from the purchase before becoming legally committed
None of these automatically guarantees a different result.
The appropriate response depends on why the valuation differs and your circumstances.
Can I Challenge a Mortgage Valuation?
Some lenders may have a process for reconsidering a valuation.
However, they may require appropriate evidence.
Simply saying:
“The estate agent says it's worth more”
may not be sufficient.
The lender or valuer may require suitable comparable property evidence meeting its requirements.
The process varies between lenders.
Will Another Lender Value the Property Differently?
Potentially, but there is no guarantee.
Another lender could use:
A different surveyor
A different valuation firm
A desktop valuation
An automated valuation
Similar underlying comparable evidence
Changing lenders solely to obtain a higher valuation can therefore be risky and could delay the transaction.
The wider mortgage position should be considered first.
What If the Lender Values the Property at £0?
A lender or valuer may sometimes decline to provide a usable mortgage valuation pending further information or because of concerns about the property.
This doesn't mean the physical property literally has no value.
It can mean the lender isn't currently prepared to treat it as acceptable mortgage security.
Further reports, investigations or remedial work may sometimes be required.
What Does “Suitable Security” Mean?
A mortgage is secured against the property.
The lender therefore needs to be comfortable that the property is acceptable security for the loan.
A property can be perfectly suitable for someone to live in but still fall outside a particular mortgage lender's criteria.
This distinction is important.
Can a Property Be Unmortgageable?
People often use the word “unmortgageable”, but it can be misleading.
A property declined by one lender isn't necessarily impossible to mortgage with every lender.
The issue may relate to that lender's specific criteria.
However, certain serious property problems can substantially restrict mortgage availability.
Understanding the reason for the decline is therefore more useful than simply applying the label “unmortgageable”.
What Property Issues Can Affect a Mortgage?
Potential issues can include:
Non-standard construction
Significant structural defects
Severe damp or deterioration
Short leases
Certain commercial surroundings
Planning or building-regulation concerns
Japanese knotweed
Flood risk
Subsidence
Unusual occupancy
Major ongoing works
Property condition
Certain title issues
Restrictive covenants
Unusual construction materials
Whether any particular issue is acceptable depends on the lender and circumstances.
What Is Non-Standard Construction?
Most conventional houses are built using forms of construction widely accepted by mainstream mortgage lenders.
Properties constructed differently may be described as non-standard construction.
Examples can include certain:
Concrete systems
Steel-frame properties
Timber-frame construction
Prefabricated properties
Unusual wall materials
However, the fact that a property uses a particular construction method doesn't automatically mean it cannot be mortgaged.
The specific construction type matters.
Why Is the Property's Construction Important?
The lender needs to consider factors including durability, marketability and suitability as mortgage security.
Some construction systems have a long and well-established lending history.
Others may be accepted only by certain lenders or subject to additional requirements.
If you're considering an unusual property, try to establish the construction type before making significant financial commitments.
What About Older Properties?
Age alone doesn't prevent a property from being mortgaged.
The UK has a large number of older homes.
However, older properties can have issues that deserve closer investigation, including:
Roof condition
Damp
Timber
Historic alterations
Electrical systems
Plumbing
Drainage
Insulation
Structural movement
An appropriate survey can be particularly useful.
What About Listed Buildings?
Listed buildings can potentially be mortgaged, subject to lender criteria.
However, they can involve additional considerations.
Alterations and repairs may be subject to restrictions, and specialist materials or methods may sometimes be required.
Before buying a listed property, understand both the mortgage position and the implications of ownership.
What About Thatched Properties?
Thatched properties can potentially be acceptable to mortgage lenders, but criteria vary.
Insurance can also require particular consideration.
If you're looking at a thatched property, provide the details to your mortgage adviser early rather than assuming every lender will accept it.
What Is Subsidence?
Subsidence generally refers to downward movement of the ground beneath a building that affects its foundations.
Signs potentially associated with structural movement should be professionally investigated.
Not every crack means subsidence.
Buildings move for many reasons, and a qualified surveyor or structural professional can assess the circumstances.
If previous subsidence is known, mortgage lenders and insurers may require additional information.
What If the Survey Finds Structural Movement?
Don't immediately assume the property cannot be purchased.
The next step may be obtaining further professional investigation.
Depending on the surveyor's recommendation, this might involve a:
Structural engineer
Building specialist
Drainage specialist
Other appropriate professional
The findings can then help you understand the seriousness of the issue and potential implications.
What About Damp?
Damp is commonly mentioned in property surveys.
However, the cause and severity matter.
Potential sources can include:
Leaks
Condensation
Poor ventilation
Defective gutters
External ground levels
Plumbing problems
Building defects
A surveyor may recommend further investigation where necessary.
Avoid assuming every reference to damp means the same thing or requires the same solution.
What About Japanese Knotweed?
Japanese knotweed can be relevant to mortgage lending and property valuation.
Lenders may consider factors such as:
Location of the plant
Extent of the problem
Risk to the property
Professional treatment arrangements
Ongoing management
Criteria can vary between lenders.
If knotweed is identified, obtain appropriate specialist advice and inform your mortgage adviser.
Does Flood Risk Affect a Mortgage?
Potentially.
Flood risk can affect areas such as:
Property insurance
Valuation
Mortgage acceptability
Future saleability
Your conveyancer's searches and other property information may identify flood-related concerns.
Buildings insurance can be particularly important because mortgage lenders normally require suitable insurance in accordance with their conditions.
What About Flats Above Shops?
Flats located above or close to commercial premises can be treated differently by mortgage lenders.
The lender may consider the type of business below or nearby.
For example, certain commercial uses may raise concerns relating to:
Noise
Smell
Opening hours
Marketability
Fire risk
Future resale
Criteria vary significantly.
Send the property details to your mortgage adviser before making assumptions about mortgage availability.
What About High-Rise Flats?
Mortgage criteria for flats can depend on areas including:
Building height
Construction
Cladding
Lease
Service charges
Building management
Fire-safety documentation
Lender requirements
If you're considering a flat in a larger building, provide full property details early in the mortgage process.
What Is an EWS1 Form?
An EWS1 form relates to the external wall system of certain residential buildings.
It isn't automatically required for every flat or every building.
Whether relevant documentation is needed depends on the building, lender, valuer and applicable requirements.
If external-wall or cladding issues are identified, additional information may be required before the lender can proceed.
Why Does Lease Length Matter?
If you're buying a leasehold property, the remaining lease term can affect mortgage lender acceptability and the property's value.
Different lenders have different minimum requirements.
Don't rely solely on the estate agent's description.
Your solicitor should establish the legal lease position.
What About Service Charges?
Service charges can be relevant to both your personal affordability and the attractiveness of the property.
A high service charge doesn't automatically prevent mortgage lending.
However, lenders can have criteria concerning certain leasehold arrangements, and you should understand the ongoing financial commitment before purchasing.
What About Ground Rent?
Ground-rent provisions can be relevant to mortgage lenders and solicitors.
Certain lease terms can create lending or legal concerns.
Your solicitor should review the lease and advise you on its terms.
Don't assume a lease is acceptable simply because another flat in the building has previously been mortgaged.
What About New-Build Properties?
New-build properties can have specific mortgage criteria.
Depending on the lender, considerations can include:
Loan-to-value
Builder incentives
Warranty
Property type
Completion timescale
Mortgage-offer validity
Tell your mortgage adviser about all developer incentives and contributions.
The lender may need these disclosed as part of the application.
Do I Need a Survey on a New Build?
A new property doesn't necessarily mean everything will be perfect.
Buyers may consider a specialist snagging inspection to identify defects or incomplete work.
This serves a different purpose from the lender's mortgage valuation.
What Is a Snagging Survey?
A snagging inspection is designed to identify defects, incomplete work or finishing issues in a newly built property.
These could range from relatively minor cosmetic issues to more significant defects.
If you're buying a new build, consider when the inspection should take place and what access the developer permits.
What If the Property Has Been Extended?
Extensions aren't automatically a mortgage problem.
However, your solicitor and lender may need to consider whether appropriate legal and planning requirements were satisfied.
Depending on the circumstances, relevant matters could include:
Planning permission
Building Regulations
Permitted development
Structural alterations
Guarantees or certificates
Don't rely solely on what the seller or estate agent says about an extension.
Your conveyancer should investigate the legal documentation.
What If a Wall Has Been Removed?
Structural alterations can require further investigation.
If a wall has been removed, questions can arise around whether it was load-bearing and whether appropriate structural support and approvals were obtained.
A survey may identify the physical issue, while your solicitor investigates the available legal documentation.
What About Loft Conversions?
Loft conversions can add valuable space, but the legal and construction position should be established.
Relevant questions can include:
Was appropriate approval obtained?
Does it meet applicable requirements?
Is it legally described as a bedroom?
Are there structural concerns?
Does the lender's valuer accept the accommodation?
Don't assume that a room marketed as a bedroom will necessarily be treated as one for valuation or legal purposes.
What If the Property Needs Renovation?
The condition of a property can affect mortgage availability.
A conventional residential mortgage lender may expect the property to meet its requirements for security and, depending on the circumstances, habitability.
Significant issues can include lack of essential facilities or major structural problems.
Properties requiring substantial renovation may need different financing depending on their condition.
Can I Get a Mortgage on a Property Without a Kitchen or Bathroom?
This can be difficult with some conventional residential mortgage lenders.
Whether a property is acceptable depends on its condition and lender criteria.
If you're considering a major renovation project, send the property details to your mortgage adviser before committing to the purchase.
Different finance may need to be considered.
What About Auction Properties?
Auction purchases operate on very different timescales from ordinary residential transactions.
A successful bid can create a legal commitment quickly, with completion required within the auction contract's timescale.
You should therefore investigate:
Finance
Legal pack
Property condition
Valuation
Deposit
Completion deadline
before bidding, not afterwards.
Never assume a conventional mortgage can be arranged within an auction deadline without checking first.
Why Should I Send the Property Details to My Mortgage Adviser?
Once you're seriously considering a property, providing the full address or listing can help identify potential mortgage issues early.
Useful information can include:
Full address
Asking price
Proposed offer
Property type
Construction
Approximate age
Tenure
Lease length where applicable
Known service charges
Known alterations
Estate-agent listing
This doesn't replace the lender's valuation or your survey.
But it can help identify obvious criteria issues before you spend money on the application.
What Should I Look for During a Viewing?
You aren't expected to become a surveyor.
But it can be useful to notice and ask questions about:
Cracks
Damp or mould
Roof condition
Windows
Heating
Boiler age and service history
Extensions
Loft conversions
Signs of leaks
Electrical installations
Parking arrangements
Boundaries
Leasehold charges
Flood history
Previous structural problems
If something concerns you, ask.
You can then decide whether professional investigation is needed.
Should I Make an Offer Before Having a Survey?
In a conventional purchase, buyers commonly make an offer before arranging their independent survey.
The survey is then undertaken during the transaction.
In England and Wales, an accepted offer doesn't normally create the same legal commitment as exchange of contracts.
This gives the buyer an opportunity to investigate the property before becoming legally committed, subject to the circumstances.
Your solicitor can explain the legal position.
What If the Survey Finds Problems?
A survey finding a defect doesn't automatically mean you should withdraw.
You first need to understand:
What is the problem?
How serious is it?
Does it require further investigation?
What might it cost to repair?
Does it affect mortgage lending?
Depending on the answers, you might:
Continue as planned
Obtain specialist reports
Request quotations
Renegotiate the price
Ask the seller to address an issue
Reconsider the purchase
The appropriate decision depends on the findings.
Can I Renegotiate After a Survey?
Potentially.
If the survey identifies significant issues, you can discuss them with the estate agent and seller before exchange.
However, the seller isn't automatically required to reduce the price.
If the agreed purchase price changes, tell your mortgage adviser and solicitor immediately because the lender will need the correct transaction details.
Should I Give My Survey to the Mortgage Lender?
Not automatically.
Your independent survey is commissioned for your benefit.
If it identifies something that materially affects the property or mortgage security, professional advice may be needed about the next steps.
Don't assume that withholding relevant information is an appropriate solution to a serious property issue.
The Mortgage Has Been Approved – Does That Mean the Property Is Fine?
No.
A mortgage offer tells you that the lender is prepared to lend subject to the terms and conditions of its offer.
It shouldn't be interpreted as a guarantee that the property has no defects.
Your decision to purchase the property remains separate from the lender's decision to provide mortgage finance.
Property Due Diligence Has Different Parts
When buying a home, different professionals are looking at different things.
Mortgage lender:
Is the property acceptable security for the mortgage?
Valuer:
What is the property worth for the required valuation purpose, and are there relevant concerns?
Surveyor:
What is the condition of the property within the scope of the survey?
Solicitor or conveyancer:
Is the legal title and transaction satisfactory, and what legal issues need addressing?
Mortgage adviser:
Does the mortgage and lender fit the applicants, property and circumstances?
These roles overlap in places, but they aren't interchangeable.
Property Checklist Before Making an Offer
Before making an offer, consider:
☐ Full property address
☐ Asking price
☐ Proposed offer
☐ Property type
☐ Approximate age
☐ Construction type if known
☐ Freehold or leasehold
☐ Lease length if applicable
☐ Service charge if applicable
☐ Ground-rent terms if applicable
☐ Known extensions
☐ Loft conversions
☐ Significant alterations
☐ Listed status
☐ Flood history if known
☐ Known structural problems
☐ New-build incentives where applicable
☐ Any unusual features
If something unusual appears, investigate it early.
After Your Offer Is Accepted
Consider:
☐ Tell your mortgage adviser
☐ Provide the full property details
☐ Instruct your solicitor or conveyancer
☐ Submit the mortgage application when appropriate
☐ Understand what valuation the lender will arrange
☐ Decide whether you want an independent survey
☐ Arrange the appropriate survey
☐ Read the survey carefully
☐ Investigate significant findings
☐ Keep your mortgage adviser updated
☐ Keep your solicitor updated
☐ Don't exchange contracts until your solicitor confirms the legal position is ready
Don't Judge a Property Only by the Mortgage Valuation
The mortgage valuation answers an important question for the lender.
But as the buyer, you have a different question:
“Do I understand what I'm buying?”
That means considering the condition of the property, legal position, likely maintenance and potential future costs — not simply whether a lender is prepared to provide a mortgage.
How Cambs Ely Mortgages Can Help
Cambs Ely Mortgages can help you understand the mortgage implications of the property you're considering.
Before submitting a mortgage application, we can consider relevant lender criteria relating to areas such as:
Property type
Construction
Age
Leasehold
Flats
New builds
HMO properties
Unusual properties
Property condition
The lender will ultimately decide whether the property is acceptable security, and an independent surveyor should be used where you require professional advice about its condition.
We help buyers in Ely, Cambridge, Cambridgeshire, East Anglia and across England, with appointments available remotely.
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Important Information
This guide provides general information and shouldn't be treated as personalised mortgage, surveying, valuation, structural, legal or property advice.
A mortgage valuation is primarily for the lender's purposes and shouldn't be treated as a substitute for an independent property survey.
Property and lending criteria vary between mortgage lenders. Where you require advice about the condition, structure or value of a property, consult an appropriately qualified professional.
Your home may be repossessed if you do not keep up repayments on your mortgage.