What is a mortgage valuation? Is it the same as a survey?

When you’re buying a property, you’ll likely come across the terms ‘mortgage valuation’ and ‘homebuyers survey’. They may at first glance seem similar, but they’re actually very different – mortgage valuations are simply designed to give the lender an idea of the value of the property, whereas a full survey will look at the structure of the property and alert you to any potential problems before you buy.

Many of us don't opt for a more in-depth survey and instead rely on the mortgage valuation, but this could prove to be a costly decision. Here’s a closer look at what each option entails and how they could help you in your mortgage search.

What is a mortgage valuation?

The first and most important thing to note is that the mortgage valuation is for the benefit of the mortgage lender, not the buyer.

It’s designed to give enough information for them to decide whether the property is safe to lend on, and up to what amount. It can also be used to help determine the loan-to-value (LTV) of the mortgage you’re applying for, and therefore the mortgage rate you’ll be offered.

The lender will either arrange for a surveyor to visit your home and conduct the valuation, or they’ll perform a desktop valuation with information that’s readily available online – such as Land Registry entries, satellite images and previous selling prices – which means they may not even need to see the property in person. In some cases, they may conduct a drive-by valuation, where the surveyor will simply drive past the property to look for any obvious issues with the walls or roof.

Either way, the valuation will be based on the surveyor’s knowledge of comparable prices in the locality and the condition of your own home. They’ll consider the size, condition, type and location of the property, whether there are any visible structural issues and prices in local area.

Once they’ve finished their survey they’ll create a report to show how much they think the property is worth, and may include a "minimum reinstatement value", which is the amount of money it would take to rebuild the property from scratch should it ever be necessary.

Bear in mind that, though you may pay for the report, you may not get a copy or even see what the surveyor has written. Yet it’s a vital part of the mortgage offer process – lenders won’t be able to proceed with the mortgage without one, and they’ll often expect to see evidence that a suitable buildings insurance policy is in place that covers the minimum reinstatement value.

Cost of mortgage valuations

This can vary depending on the mortgage lender. In some cases, mortgage valuation fees can be included as an additional perk – free valuations are a common feature of many mortgage deals – though in others you’ll be expected to pay for it, which may be a flat fee (typically around £100) or based on the size of the property. You may be able to add this on to your mortgage amount or you can pay for it separately.

Find out more about the costs of buying a home in our guide.

How long does a mortgage valuation take?

Mortgage valuation surveys don’t normally take long. If you have someone coming to your home they can be completed in approximately 15-30 minutes, during which time the surveyor will look for any obvious defects that will affect the value of your property.

They don’t go into anything more than superficial depth when considering the condition of the property so it can be completed quickly, and if they conduct a desktop or drive-by valuation – particularly if they use what’s known as an Automated Valuation Model (AVM) to help inform the valuation – it may be even quicker.

How long between a valuation and a mortgage offer?

You can normally expect to receive a mortgage offer around a week or two after the valuation, though this will vary depending on the lender and whether anything has been flagged up in the report.

If so you may be asked to provide additional information – such as a Structural Defects Warranty for properties less than 10 years old, or an External Wall System form if the property has external cladding – or further investigation may be required if things like damp are suspected.

What if the mortgage valuation is lower than my offer?

If the valuation is less than the amount you’ve offered to buy the property for, this is known as a down valuation and can seriously affect your mortgage offer. This can happen if house prices in the area you’re buying aren’t in line with market trends, for example, or simply if the seller was over-optimistic in their pricing.

Regardless of the reason, a down valuation means the lender will likely reduce the amount they’re willing to lend and it may impact the interest rate as well, and it could potentially jeopardise the entire purchase.

So what can you do? There are a few things you can try, including:

• Speaking with the seller to see if they’ll reduce the sale price. They’re not obliged to do so, but if they’re likely to face the same issue with other buyers, they may be inclined to negotiate.
• Raising a larger deposit. If you’re not able to borrow as much but still want to buy the property, see if you can put down a larger deposit to make up the difference.
• Applying for a different mortgage with a higher LTV.
• Applying with another lender who may use a different surveyor in the hope you get a different result (though it’s advisable to speak to a mortgage broker first).

Can you challenge a mortgage valuation?

Yes, you can. If you’re convinced that the down valuation is incorrect – and importantly, if you have evidence to prove it – you can challenge the valuation with your lender. This may be the case if, for example, the surveyor didn’t visit the property in person and so hadn’t seen the internal improvements made, and you want them to look again. However, the lender is under no obligation to accept the challenge.

What happens if the valuation is higher than my offer?

If the valuation is higher than the agreed selling price it’s a bonus! Nothing much will come from it however, it simply means that you’re buying the property for less than current market value, and you’re more likely to be accepted for the mortgage you’ve asked for.

Valuations when you remortgage

A valuation when you remortgage works in much the same way as when you’re buying a new property – the lender will need to conduct a valuation to ensure it’s worth the amount you’re asking for.

The main difference is things can get a little trickier if you’re down-valued; you already live in the property so there’s less scope for negotiation, so if you can’t challenge it may be that you need to accept a higher LTV, for example.

Is a mortgage valuation the same as a survey?

No. A mortgage valuation and survey are very different – the former is very limited in scope and is only likely to uncover obvious, visible defects as part of a brief inspection, and may not even be done in person.

Conversely, the latter is an in-depth survey that’s designed to alert you to potential problems before you buy – it will always be conducted in person and is far more thorough, and is for your benefit rather than the lender’s. Indeed, the result of a survey could lead you to back out of an unwise purchase or give you the bargaining power to go in with a lower offer, offering an extra layer of protection and a bargaining chip in negotiations.

Note that while the lender arranges the mortgage valuation, you’re responsible for arranging the survey. There are different levels of survey you can choose depending on whether you go through RICS (Royal Institution of Chartered Surveyors) or RPSA (Residential Property Surveyors Association):

• A Level 1 home survey (Rics) is very basic. It will include a visual inspection and a summary of any obvious risks in a traffic light rating.
• A Level 2 (Rics) or Home Condition Survey (RPSA), also known as a Homebuyers Report, will include a more thorough inspection of the property, an assessment of any problems and advice on repairs or maintenance. Things like damp and subsidence should be picked up with this kind of survey.
• A Level 3 (Rics) or Building Survey (RPSA), otherwise known as a full structural survey, will look at both the condition and structure of the property in much more depth. It’ll identify any risks and potential hidden defects, and can include projected costs and potential timelines for remediation work.

It’s often advisable to opt for a Level 2 survey or above, which is what we’ll focus on below.

What do homebuyer and full structural surveys offer?

Here’s a closer look at what the homebuyers and full structural surveys involve in comparison to a mortgage valuation:

	Mortgage valuation	Homebuyer report (Level 2)	Full structural survey (Level 3)
Best for...	Required for all properties as part of the mortgage application May be the only step needed for new builds or for a property you already own and have had a survey on previously	Any property, although you should consider a structural survey for older homes	Older properties Unusual properties A property you wish to extend or alter A property you suspect may have a defect
For the benefit of...	Your mortgage lender	You	You
Valuation included?
Rebuild valuation included?
Describes condition of property and type of construction?
Aims to uncover obvious, visible defects with property?
Aims to uncover any visible problems to the surveyor as part of an in-depth inspection?
Aims to uncover hidden problems with the property?
Potential cost?	Approximately £100, but may be covered by the mortgage lender	Based on the value of the property but typically between £400 and £1,000	Dependent on property value but is typically £1,000 or more

Do I need a house survey?

Ideally, yes. It may not be a legal requirement but it’s unwise to rely solely on your mortgage valuation if you’re buying a new home, something that becomes more important the older the property is. The valuation will simply show whether you are paying too much (or too little!) for a property, whereas a survey will let you know if there are any faults that are present now or could develop in the future, helping you determine if it really is a sensible purchase.

Some view newly built homes as the exception to this, as they benefit from the National House Building Council (NHBC) 10-year guarantee for any major faults or defects in construction or materials. However, there is a case for a survey even with a new build, as after 10 years any defects would have to be remedied with your own money.

Things to bear in mind

• Full structural surveys do not include a valuation – you’d need to have one of these on top of the survey.
• Where a mortgage lender offers a free or refunded valuation fee incentive as part of the mortgage deal, this will usually just apply to a mortgage valuation, not a homebuyer or full structural survey.
• Your mortgage provider will need to conduct their own valuation regardless of whether or not one is included in your survey.
• If your property is affected by Japanese knotweed it is likely that you'll need to contact a specialist.
• Surveys will be more expensive than mortgage valuations (which are often paid for by the lender), but can be worth it for extra peace of mind.