Mortgage Valuation Explained

In this Guide, we will explain why this basic inspection for determining property value is important, how a mortgage valuation works, what they cost and how they differ from house surveys. Also, we will explain what to do in case your mortgage valuation is lower than the offer price.

If you are first time buyer, maybe you have just heard about mortgage and what are the conditions of a lender when comes to approve your mortgage request. A mortgage valuation or a valuation survey is carried by your lender when you apply for a mortgage to determine the value of property in question.

In case you are applying for a remortgage, the lender will request a valuation to check if your stated property value is true or not. A mortgage valuation scope is limited and is usually disclosed to the lender and will be used by the bank to understand whether the property will be a viable security for the loan.

A valuation report can give you a rough idea of the property value and if you will pay too much or too little for your dream home. 


As we saw before, a valuation report can help you to set the value of your property and is a “must have” piece of information when comes to buying a house process. There are different types of property valuation, such as:

  • Valuation Report – A valuation report is an inspection and report of a property that will be used to determine its value and is usually requested by a buyer. Is not a survey and would not inform any structural or hidden conditions or issues to the property. 
  • Mortgage Valuation – A mortgage valuation is carried by an assigned surveyor in behalf of the lender and used to check the value of the property and to determine if can be used to secure the loan value. We would recommend not to rely on lender valuation when comes to buying a house.
  • Estate Agent Valuation – An estate agent’s evaluation can be useful when comes to set the value of your home, especially if is done by an experienced professional within your local area. As a tip, we would recommend comparing the valuation of at least 3 local estate agents when comes to sell your home.

Depending on lender’s risk appetite, their assigned surveyor could carry just a mortgage valuation or can even carry a more complex survey. For example, if the property you are planning to buy is made from a non conventional material or using a non traditional method of building, the lender will instruct a surveyor to go and visit the property instead of just relying on a desk research, drive by valuation or on previous valuations within the area. (if they lent in the area before).

Regardless of the lender’s choice of survey, they will use the surveyor’s professional opinion on the value of the property and to accept or not your loan request. 

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A Valuation Report is a very basic report, having at most 2 or 3 pages, and will included only visible and obvious defects which would affect the property value. 

In comparison,  a HomeBuyer Report or a Building Survey, will include a higher level of details and the surveyor will be requested to inspect the structural condition of the building and offer their professional opinion and expertise on any maintenance or repair work needed.

During a valuation survey, the followings will be in question:

  • the overall condition of property
  • whether the building is of traditional or non-traditional construction
  • obvious and visible sings of roof, floor, wall damage, signs of damp or faulty wires, etc.
  • if the building suffered any alterations or if was refurbished
  • if the declared surface and number of rooms is accurate
  • how it compares with other properties within local area.

Depending on the area, size and value of the property a mortgage valuation report will cost between £250 to £800+. 

Most important lenders will include the price of a mortgage valuation into their offer, but are some cases when they will not add a valuation fee into the contract; for example, HSBC will not add their mortgage valuation fee onto heir residential or buy-to-let mortgages. 

Others are charging between £200 (Halifax) to £625 (Barclays). Sometimes, a mortgage provider would not recommend a specific chartered surveyor to work with, or if you choose to look elsewhere in order to get a better price, you should always look for an accredited surveyor.

After a mortgage valuation, the surveyor will feedback their opinion on the value of the property to your mortgage lender. If their expertise suggested a similar price of sale or remortgage is likely that your lender will offer you the requested loan.

However, are cases when you will get a “down valuation” – your price is higher than the actual value of the property which will lead to a revised mortgage offer from your bank or lender.

As a very basic report, the valuation report is easy to read and comes in a form of a letter or email attached to the mortgage offer. Being a very simple and easy to read report will most likely include any potential clear defects or damage to property which could have impacted your home value. 

If you are having issues reading the report or something is unclear, you can always ask your mortgage provider to help you go over it. This is withing their interest too.

So, why is important to understand what a down valuation means for your mortgage? Let us go through the following example.

You want to buy a £200,000 property and have a £20,000 deposit. Your mortgage is a 90% LTV which means that the bank will give you a loan of £180,000. 

But if the lender’s mortgage report shows that actually the property worth only £185,000, it means that the loan you can get is only £167,000. With you deposit, you can offer only £187,000 which leaves you with a £13,000 shortfall.

In this case, the best course of action is go an renegotiate the sale price with the seller. A down valuation is a strong bargain tool. If the seller does not budge or you are remortgaging a property you already own, you may be able to challenge the valuation if you have a robust evidence that the property is worth the amount you declared.

Down valuation are quite rare (as per RICS blog post is no such thing) and usually happen when the house prices is out of sync with the current market trends, when is a gap between what estate agents and sellers believe a property is worth.

To avoid receiving a down valuation as a seller or a buyer you need to: 

  1. Research the property’s value – It is important that you research the value of the property you want to buy or sell. In a seller case, if you want to remortgage, probably would be a good idea to hire a chartered surveyor to carry a valuation survey for you.
  2. Check with your lender – In some cases, a lender can provide you a value for your house and that can be used to inform your decision on how much to put your property on market for.
  3. Make a realistic offer – As a buyer, you should research the area for your dream property. If the property is on sale for £300,000, but you have found similar properties within the area (in a similar condition) for £270,000, do not be afraid to put an offer under the asking price. 
  4. Find the right mortgage provider – Research and choose a mortgage broker which has access to every possible mortgage deals so it can recommend suitable lenders for your financial circumstances and the type of property you are after.

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As we mentioned before, a mortgage valuation is a very basic report and is not the same as a house survey. You should never rely solely on a mortgage valuation when comes to buying your home because will miss any potential issues which in most cases are hidden. 

In fact, even if you pay for the mortgage valuation you might never see the valuation report because its purpose is to serve the lender requirements not yours.

So, for your piece of mind and to avoid any future issues, we recommend getting an expert opinion on the property you wish to buy. As a homebuyer, you have available a series of surveys which can help you getting a better understanding of the condition of your dream home. 

HomeBuyer Report or a Building Survey can alert you to potential defects or other problems; bear in mind that valuation reports can be added to these reports and you should double check with your chosen surveyor if is included or not and if they have worked for a lender before or not. 

We recommend getting an HBR if your property is not older than 80 years old and is traditional construction, and you do not plan to have major works carried out once you bought it. If you are not sure what type of survey you need, please have a look at our Guide for “What Type of Survey I Need?“.

Written by Danil P.
27th Nov 2019 (Last updated on 10th Apr 2023)
8 minute read
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