Mortgage valuation - will it be ever be higher than the purchase price?

hshen

I just got my home survey report from the lender's surveyor.
And it's exactly the same as the purchase price.

My question is whether this is normal practice.
Common sense tells me there are no reasons for the surveyor to stick his/her neck out for a higher valuation if their think the property is a worthy collateral for the mortgage.

Am I right to think this, or is it a coincidence that the valuation is exactly the purchase price?

Thanks,

brit1234

Count yourself lucky that the valuation isn't under the purchase price with these falling prices.

Valuations can be higher than purchase prices but that is in a booming house market, we are now in a crashing one so it won't happen.

LilacPixie

The property i'm buying the valuation is 13k higher than the offer price. I surprised me TBH. Scotland so homereport says the mortgage valuation but my lender wanted to do their own and they agreed with the home report valuation. It doesn't change anything though, LTV is worked out on purchase price and deposit we have rather than value so it means nothing.

I would say as long as the surveryor is happy the property is good for the price offered/LTV required then they will not go any higher.

hshen

brit1234 wrote: »

Count yourself lucky that the valuation isn't under the purchase price with these falling prices.

Valuations can be higher than purchase prices but that is in a booming house market, we are now in a crashing one so it won't happen.

Agreed. I did manage to push the price down a fair bit. Otherwise my LTV will be in trouble.

But it does seem like the surveyor was reluctant to give it a higher valuation than necessary, as we spoke earlier and he hinted it was worth 10-20k more.

Anyway I'm just glad it's not below the purchase price!

andthethreebears

Our 'rebuild' value for insurance purposes is what we paid for the house (and plot etc)

I was fairly sure that a valuation for mortgage purposes was either to say 'yes it's worth that (or more)' or 'no, it's worth x amount' - I'm no expert tho, that's only from looking into it when we bought!

hshen

andthethreebears wrote: »

Our 'rebuild' value for insurance purposes is what we paid for the house (and plot etc)

I was fairly sure that a valuation for mortgage purposes was either to say 'yes it's worth that (or more)' or 'no, it's worth x amount' - I'm no expert tho, that's only from looking into it when we bought!

I'm new to all this but it seems odd to be that your rebuild value is same as what you paid for!

You must have picked up a bargain or purchased from a long time ago.

My rebuild cost is only 40% of my house value. Timber frame with single brick walls I'm afraid.

I'm guessing normally it'll be 50-60%.

suki1001

andthethreebears wrote: »

Our 'rebuild' value for insurance purposes is what we paid for the house (and plot etc)

I was fairly sure that a valuation for mortgage purposes was either to say 'yes it's worth that (or more)' or 'no, it's worth x amount' - I'm no expert tho, that's only from looking into it when we bought!

I wouldn't use a rebuild cost, as it's based on materials etc. When our victorian terrace was valued at £30k x number of years ago, the rebuild for insurance purposes was £82k, because the materials don't always reflect the market value.
I think surveyors tend not to rock the boat, as it would be very time consuming for everyone if the surveyor used slight changes in the value everytime. I suppose it's more that they agree the house is worth that. Besides the ea's set the "market value" in the first instance, they'd be rubbish if they weren't correct most of the time.

Doozergirl

Mortgage valuations are never more than purchase price unless you have such a low LTV that they feel very brave indeed. I have never seen a mortgage valuation that came in higher than the agreed price though I have seen independent valuations that vary. But mortgage valuers have professional indemnity insurnace to pay for that it wouldn't be great to claim on - there is not point valuing higher than is required. The danger there is the the borrowers request more funding because they have a better LTV.

Your common sense is correct.

As for insurance rebuild, it really does depend on where you are. Central London, it's going to cost a great deal less to rebuild. Some random terrace in Stoke on Trent will almost certainly cost considerably more to rebuild than it costs to buy. No rule there.

neverdespairgirl

hshen wrote: »

I'm new to all this but it seems odd to be that your rebuild value is same as what you paid for!

You must have picked up a bargain or purchased from a long time ago.

My rebuild cost is only 40% of my house value. Timber frame with single brick walls I'm afraid.

I'm guessing normally it'll be 50-60%.

Depends on the construction. My parents' house is an early 14th century hall house. It'd cost a lot more to rebuild that it's worth

Jackinbox99

I wondered the same thing. The house ive just purchased is easily worth about 20k more than I paid, but the survey just agreed that it was worth the purchase price.

quantic

My rebuild cost was 38k more than I paid for the house. House valuation was the same as offer, to the penny.