A mortgage provides an excellent opportunity to get on the property ladder. When you apply for a mortgage, lenders hire mortgage surveyors to inspect the property before agreeing to lend you any money. The inspection aims to look for factors that could cause lenders to lose money. Let’s find out what a mortgage valuation is and what a mortgage surveyor looks for during a mortgage valuation.
What is a mortgage valuation?
When you apply for a mortgage, the mortgage lender will carry out its due diligence. This involves confirming the value of the property and ensuring it’s a property they can lend against.
The mortgage lender will hire a mortgage surveyor to inspect the property. The inspection primarily determines the property’s value by comparing similar properties sold in the area.
Additionally, the mortgage surveyor will try to identify any factors that could affect the property’s value. If such issues are discovered, a mortgage lender may refuse your mortgage application.
What does a mortgage surveyor look for?
A mortgage surveyor looks for several issues including:
- Flood risks: any history or known risk of flood can affect a property’s value. This could result in a mortgage lender losing money if you default on your mortgage repayments.
- Ground instability: like flood risks, ground instability could also affect the future value of a property.
- Structural problems/non-standard construction: visible structural problems are a deterrent to buyers. This means that a mortgage lender won’t risk its money on a structure that might lead to a loss.
- Whether the property is run down: if a house is clearly in a poor state of repair, it falls into the same category as a house that has structural problems.
- Whether the property is located above a restaurant: businesses like restaurants could increase littering, late-night noise, odours and encourage anti-social behaviour. These are factors that could negatively impact future buyers’ appeal. Mortgage lenders may find this risky and thus refuse your mortgage application.
What can you do to avoid a mortgage application refusal?
The first thing you need to do is understand what a mortgage surveyor looks for during a mortgage valuation and why.
Secondly, it might be in your best interest to hire an independent property surveyor before applying for a mortgage.
The mortgage surveyor looks for factors that might affect a property’s value so that the lender does not lose money. This may indicate that the mortgage surveyor is not looking out for you.
Hiring an independent property surveyor is beneficial in two key ways:
- You identify factors that might lead to a mortgage application refusal and look for ways to mitigate them.
- You identify other factors that might not affect your mortgage application but may cost you and affect your ability to keep up with your monthly mortgage repayments. A good example is house repairs.
There are times when you might not be able to mitigate some factors that may lead to a mortgage application refusal. It might be best to look for another property in such circumstances.
