When you’re buying your first home, one of the critical steps in the mortgage process is the property valuation. This valuation helps the lender confirm the property’s value and suitability for lending, ensuring that the property meets the lender’s requirements. Different lenders require different types of valuations, each providing a unique level of detail and insight. Here’s a breakdown of the three main types of mortgage valuations, what they can reveal, and some advice on choosing between local and national surveyors.
1. Basic Valuation
The Basic Valuation is the minimum requirement for a mortgage approval and is primarily conducted for the lender’s benefit, not the buyer’s. Its purpose is to confirm that the property is worth the amount the lender is willing to loan. While it doesn’t provide detailed insights into the property’s condition, it’s essential for ensuring the property’s value aligns with the mortgage amount.
A Basic Valuation can be conducted in different ways:
- Desktop Valuation: Involves a computer-based assessment using local property data and recent sales to generate an estimated value. This approach is quick and may be used for lower-risk properties in areas with sufficient data.
- Drive-By Valuation: The surveyor visits the property and assesses it from the outside, reviewing its location and general condition.
- Internal Inspection: Some Basic Valuations include an internal inspection, where the surveyor briefly visits the property to check its general state. This may vary by lender and property type.
Cost: Many lenders now offer Basic Valuations for free, but if you pay for it, the cost typically ranges from £150 to £300.
When It’s Used: A Basic Valuation is usually suitable for standard properties where only a quick assessment is needed to confirm value. This valuation doesn’t provide in-depth detail about the property’s condition, so it’s less useful for buyers seeking reassurance about potential issues.
2. Homebuyer Report
The Homebuyer Report goes beyond the Basic Valuation by providing a more detailed inspection of the property’s condition. This report is designed for buyers who want insight into potential issues that may affect the property’s value or require repairs.
A Homebuyer Report typically includes:
- Internal and External Assessment: The surveyor inspects both the inside and outside of the property, checking walls, ceilings, windows, plumbing, and electricals.
- Condition Ratings: Key areas of the property are rated to highlight any repairs needed or future maintenance.
- Potential Issues: This report identifies issues that could impact value, such as damp or structural concerns, and helps buyers understand any maintenance requirements.
- Reinstatement Cost: The report often includes an estimate of the property’s rebuild cost, helpful for insurance purposes.
Cost: Approximately £350 – £550
When It’s Used: This type of report is ideal for buyers who want more confidence in the property’s condition, especially for slightly older homes or properties in areas prone to specific issues.
3. Building Survey (Full Structural Survey)
The Building Survey, also known as a Full Structural Survey, is the most comprehensive type of valuation. It involves an in-depth inspection of every accessible part of the property, making it ideal for older homes, properties with unique features, or buildings that may have structural concerns.
A Building Survey includes:
- Detailed Structural Inspection: Every accessible part of the property is examined, from foundations to the roof, identifying potential issues like subsidence, timber decay, or damp.
- Comprehensive Condition Report: This report covers all elements of the property, including roofing, drainage, insulation, and internal fittings, giving buyers a thorough understanding of the home’s health.
- Repair and Maintenance Recommendations: Surveyors may outline immediate and future repairs, along with estimated costs, to help buyers plan accordingly.
Cost: Typically ranges from £600 to £1,500 or more, depending on the property size and complexity.
When It’s Used: Building Surveys are recommended for older or non-standard properties, buildings with unique structures, or homes where the buyer wants detailed insight into any existing or potential issues.
What Can Be Found During a Valuation?
A mortgage valuation can reveal several important factors about the property. Although a Basic Valuation mainly verifies market value, more detailed surveys can identify issues that may influence the property’s value and future repair needs. Here are some of the common findings:
- Structural Issues: Problems with the property’s foundation or structural elements, such as cracks in walls, signs of subsidence, or roof damage, which may impact long-term stability.
- Damp and Mould: Damp and mould can be significant concerns, especially in older homes, and may require further investigation and treatment to prevent further deterioration.
- Electrical and Plumbing Systems: Surveys often check basic electrical and plumbing elements to ensure they meet safety standards, especially in a Homebuyer Report or Building Survey.
- Roof Condition: Roof problems can be costly to fix, so a Building Survey might reveal wear or damage that will need attention, especially in older properties.
- Pest Damage: In some cases, evidence of pests like woodworm or termites may be uncovered, requiring specialist treatment to prevent future damage.
- Localised Issues: Some properties may have issues specific to the area. For instance, properties in South Cheshire may face a risk of Red Ash, which affects the structural stability of homes built with certain materials.
These findings not only help buyers understand what repairs or maintenance may be needed but can also influence the price negotiations with the seller if major issues are found.
National vs. Local Surveyors: Which Should You Choose?
When it comes to choosing a surveyor, both national companies and local surveyors offer benefits, but they can differ in terms of knowledge and insight.
- National Surveyors: Large national firms often offer a streamlined and efficient process, with established standards across locations. They may be more convenient for arranging standard valuations, particularly for newer properties.
- Local Surveyors: Local surveyors, on the other hand, have an advantage when it comes to area-specific knowledge. In areas like South Cheshire, for example, local surveyors are often more familiar with regional issues such as Red Ash. Red Ash is a common issue in certain areas that can affect the structural integrity of properties built with certain materials. A local surveyor with specific knowledge of these issues can provide insight into any red flags that might be overlooked by a national company unfamiliar with local property concerns.
Choosing a local surveyor can be especially valuable if you’re buying an older property or a home in an area known for particular construction issues. Their regional expertise can provide added reassurance that the property has been assessed thoroughly with any local factors in mind.
