Many buyers are confused by the difference between a Mortgage Valuation, a Homebuyers Report and a Structural Survey. If you don’t work in the industry, it’s understandable, but there’s an easy way to clarify.
The mortgage valuation is a relatively cursory appraisal of the property that is aimed, primarily, at establishing the open market value of the property. Although the surveyor must be on the lender’s approved board of valuers, sometimes they don’t even visit the property, instead the research is done online.
Whilst a mortgage valuation is usually based on a home inspection, the process is relatively quick and the valuer isn’t expected to make any detailed investigations. For example, he’s unlikely to lift carpets or even inspect loft space. The primary reason for the mortgage valuation report is to establish that the property that will form the collateral for the mortgage is worth enough to meet the lender’s criteria.
Most importantly, whilst you as the buyer will usually be required to pay for the valuation, it’s solely for the benefit of the lender (i.e. the mortgage company). The good news is that the fees charged are based on agreed scales and they’re relatively low.
The Homebuyer’s Report is designed to meet the requirements of a homebuyer that wants the reassurance of a more detailed inspection of the fabric of the property as well as making an informed judgment on the value of the property. Homebuyer’s Reports are more expensive than a mortgage valuation but they will make a more detailed appraisal of the property’s fabric and as such a report is useful for buyers of secondhand housing stock where roofs are older and damp proof courses might have been installed post construction.
A Homebuyers Report is generally commissioned by the buyer but it is possible with some lenders to ask the same surveyor to carry out the Homebuyers Report when he does the mortgage valuation. However, many borrowers prefer to instruct an Independent Surveyor to carry out the Homebuyers Report on their behalf.
In most cases, a Homebuyers Report would be considered sufficient for your purchase. However, when buying an older property or one in need of renovation, commissioning a more detailed survey that is more intrusive and goes into considerable detail, might be worth considering.
Whilst all three valuations can be undertaken by members of the RICS (a Chartered Surveyor - either ‘structural’ or ‘valuation/general practice’) a structural survey in particular might also undertaken by a specialist structural engineer. Structural surveys are usually commissioned after a particular concern has been identified, either by a previous inspection or at the time you agreed the purchase.
The big advantage to commissioning a structural survey is that you are able to remove uncertainty both from the buying process and, therefore, also from the lender’s risk appraisal when considering loan criteria.
All surveyors are required to hold Professional Indemnity Insurance and so, if they are negligent in their advice you may have a case to sue them for damages to cover and consequential loss you have incurred as a result. Of course, the level of expertise expected from a short inspection for a mortgage valuation or a more detailed structural survey will vary and to a large extent, you get what you pay for.
It’s likely that a structural survey will require access to all areas of the home and a surveyor might even want to remove carpets, even some plaster work, etc. If this might be the case it’s worth checking first that the owner is happy for this to be done. It’s likely that you will be asked to make good any damage caused.
In all cases, a surveyor might recommend specialists be commissioned to undertake further investigation as a result of their findings. Most commonly, this will be the recommendation to commission a report on the cost or need for the installation of a damp proof course or to check the condition of the wiring in a home. These can be done by specialists and in some cases they do not charge, on the basis that they are likely to secure work from the quotation.
Related articles:
With the stamp duty relief ending in England and Northern Ireland, we have listed the top 10 cheapest areas for first-time buyers as published by Rightmove.
Are you looking to purchase your first home but unsure where to begin? Here are some tips to get you started.
Choosing which fixed rate to go for has been a dilemma for many of our clients so far this year. There really isn’t a right or wrong answer, but below we will look into the pros and cons of a two-year and five-year to help you make the right decision for you.
14 days ago
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
15 days ago
According to Rightmove, a whopping 500,000 UK homebuyers are rushing to finalise their home purchase before the new Stamp Duty rules change in April.
The UK government is introducing new rules for Energy Performance Certificates (EPCs) that will impact landlords. Here's a summary of the key changes
22 days ago
Choosing to buy a house is one of the biggest decisions you are likely to make in your lifetime. There are many factors that influence a house purchase, these include: finances, housing market conditions, and mortgage rates.
25 days ago
Since being launched back in 1999 Individual Saving Accounts (ISAs) have been very popular for those wanting to put money into savings. There are four types of ISA, and the majority allow flexible saving and the ability to withdraw funds easily. There are financial penalties on certain products, these usually pay the most interest.