How are mortgage valuations done?

Willow226

Hi all…

can anyone advise me on how mortgage valuations are done? 

We have had a mortgage approved subject the valuation. Will the valuer gain a view of the price we are offering (70,000) and will they simple ‘agree’ with this price or do they give a figure (or figure bracket such as 65-70k)? 

How often do they disagree with the price paid? 

We are giving a 15% deposit so the loan value is actually £58,500 … is this the amount the house needs to be valued at to secure the mortgage as that is what the lender is giving? 

Sorry for all the questions… the minimum purchase price my mortgage company will work with is 70,000 so I am worried the valuer doesn’t ‘agree’ and I lose this purchase! 

theartfullodger

It may surprise you to find that different lenders have difference rules, processes, advisers, valuation tools.

So there may be typical ways things are done, but no hard & fast rules about how mortgage valuations are done.

Sandtree

In my limited experience the valuer will simply either give a single value or state that the £70k you have offered is appropriate

Obviously if they slightly under value it the mortgage may still be able to proceed but at a higher LTV and so potentially higher interest rate etc. 

How often they undervalue from offer probably is fairly cyclical and potentially regional... certainly there seems to have been more cases on here of people posting that they've a problem because the mortgage valuation has come in below offer than there normally is but that could be coincidental. 

RS2OOO

Willow226 said:

Hi all…

We are giving a 15% deposit so the loan value is actually £58,500 … is this the amount the house needs to be valued at to secure the mortgage as that is what the lender is giving? 

No.
If the value came in at £58,500 then that makes loan to value 100% which is unlikely to be compatible with the mortgage product you have chosen.

If your mortgage offer is based on a 90% LTV for example, you need the valuation to be at least c.10% more than the amount you are borrowing.

Mahsroh

I've only ever heard of down valuations. I've never had a valuation come back higher than what i'd said / asking price. So, unless anyone on here has different experiences (although as above there is no hard and fast rule) the stance seems to be to agree with the borrower valuation / asking price, unless there is good reason not too. Last two Mortgage applications i've done, I put my own valuation down on the remortgage application of by BTL at £115k....... shock horror the valuation came back at £115k. I'm convinced if i'd put it at £118k the valuation would've come back the same. Likewise when we purchased our last home - we offered £385k - valuation came back at £385k. Again, i'm convinced if i'd put 400k the valuation would've come back the same. 

My personal favourite though is as a first time buyer I offered asking price which was a very specific £109,950. The valuation report actually said "I value this property in the region of £109,950". Not £110k, £109,950!! 

Willow226

Sandtree said:

In my limited experience the valuer will simply either give a single value or state that the £70k you have offered is appropriate

Obviously if they slightly under value it the mortgage may still be able to proceed but at a higher LTV and so potentially higher interest rate etc. 

How often they undervalue from offer probably is fairly cyclical and potentially regional... certainly there seems to have been more cases on here of people posting that they've a problem because the mortgage valuation has come in below offer than there normally is but that could be coincidental. 

I just wondered if the valuer typically agrees and it’s unusual for them to under value… or if undervaluing is actually quite common haha. I know it’s probably not as straight forward as that… but I was hoping there was a ‘most cases…’ answer haha 

Sandtree

Willow226 said:

Sandtree said:

In my limited experience the valuer will simply either give a single value or state that the £70k you have offered is appropriate

Obviously if they slightly under value it the mortgage may still be able to proceed but at a higher LTV and so potentially higher interest rate etc. 

How often they undervalue from offer probably is fairly cyclical and potentially regional... certainly there seems to have been more cases on here of people posting that they've a problem because the mortgage valuation has come in below offer than there normally is but that could be coincidental. 

I just wondered if the valuer typically agrees and it’s unusual for them to under value… or if undervaluing is actually quite common haha. I know it’s probably not as straight forward as that… but I was hoping there was a ‘most cases…’ answer haha 

Just look on here and you will see half a dozen threads about people saying their mortgage valuation has come in too low over the last couple of weeks and other people replying saying they've had the problem too.

Some one working in mortgages could probably give a more accurate answer to the frequency but its logical that in a time of volatile pricing as we've seen over the last 24 months that the risks are greater than when in steady state. Even analysts arent  agreeing what the long term impact is going to be of covid, the associated stamp duty holiday etc.

Willow226

@Mahsroh thank you! I get what you’re saying. I’m hoping he will agree ‘in the region of 70,000’ lol! 

I was hoping that there was more cases of the purchase price being agreed than not. Just trying to settle anxieties. 

Valuation isn’t until Tuesday! 

Mahsroh

Willow226 said:

@Mahsroh thank you! I get what you’re saying. I’m hoping he will agree ‘in the region of 70,000’ lol! 

I was hoping that there was more cases of the purchase price being agreed than not. Just trying to settle anxieties. 

Valuation isn’t until Tuesday! 

As others have said, it is true that a lot seem to be coming back down valued over the last year or so. One of the brokers who regularly post on here will probably be able to give you stats, but I suspect whilst we see a lot of issues on here with down valuations in the scheme of the entire housing market they may still be low. Let's face it nobody is going to take to an internet forum to say "my mortgage valuation matched my offer, what do I do now?" so we only generally see the bad news stories on here. 

The anxiety is probably the same as anybody else awaiting a mortgage offer. I know I have those same anxieties every time! Fingers crossed it'll be fine. 

badger09

Willow226 said:

@Mahsroh thank you! I get what you’re saying. I’m hoping he will agree ‘in the region of 70,000’ lol! 

I was hoping that there was more cases of the purchase price being agreed than not. Just trying to settle anxieties. 

Valuation isn’t until Tuesday! 

What was the asking price?

What have similar properties sold for recently?

Willow226

badger09 said:

Willow226 said:

@Mahsroh thank you! I get what you’re saying. I’m hoping he will agree ‘in the region of 70,000’ lol! 

I was hoping that there was more cases of the purchase price being agreed than not. Just trying to settle anxieties. 

Valuation isn’t until Tuesday! 

What was the asking price?

What have similar properties sold for recently?

House was valued by the EA and because of the family wanting to sell it quickly (it was their grandmas property and she passed away) they put it up at the valuation of £70,000, we offered that, and they accepted for a quick sale (we are first time buyers, no chain). 

Similar properties are around that price, some a little lower, some a fair bit higher… it’s an end terrace property with a front, side and back garden. There is a drive and a garage. The inside does need updating though. We are in the hull area.