Is Mortgage valuation linked to LTV?

ChocoHoop

Hi All,

I want to know if Mortgage Valuation done by the bank is by any how linked to LTV. i.e. if your LTV is high, the bank will value the house leniently as compared to if your LTV is low.

I recently applied for a mortgage from two different lenders and both of them value the house exactly my offered price. One of them did not even visit the house (did desktop valuation), the other lender visited for 10 mins.

They even didn't verify if the house was standard build or non-standard, which resulted me in thinking, since my LTV is 25% or above, the bank doesn't really care about valuing the house correctly as their money is anyhow safe.

Please can i get your thoughts on this (especially mortgage advisors and/or surveyors) 

(This may be a silly question, so please forgive my ignorance).

user1977

How do you know they didn't verify whether the house was non-standard build? The surveyors are very likely to know what to watch out for.

The valuation figure itself should be assessed by the same method, lenders may be more lenient about adverse factors depending on what the LTV is.

Why are you asking?

ChocoHoop

user1977 said:

How do you know they didn't verify whether the house was non-standard build? The surveyors are very likely to know what to watch out for.

The valuation figure itself should be assessed by the same method, lenders may be more lenient about adverse factors depending on what the LTV is.

Why are you asking?

Thanks for replying. I am trying to understand if I should trust the valuation provided by bank or not. How do I know they didn't verify whether the house was non-standard build, because it was never mentioned in any of the document shared with me. Although, now that you asked, I have not seen if they mentioned standard build either.

user1977

The bank's valuation is for the bank's benefit, it's not something for you to trust. You get your own survey if you want to know the value or method of construction.

ChocoHoop

Surely, the bank valuation is based on some scientific forumal rather than gut feeling. I am trying to understand if that forumla do consider LTV as deciding factor. Will wait for someone with more knowledgeable to respond.

kingstreet

The lender's mortgage report and valuation is a simple "is this property suitable security for the mortgage?" and is likely to highlight only major issues affecting the property's saleability in the event of repossession. A surveyor will look at the estimated valuation or purchase price provided by the lender and use comparables (recent sales of similar property in the vicinity) to decide if the figure provided is realistic. 

user1977

ChocoHoop said:

Surely, the bank valuation is based on some scientific forumal rather than gut feeling. I am trying to understand if that forumla do consider LTV as deciding factor. Will wait for someone with more knowledgeable to respond.

Like I said, it doesn't. Valuations are done according to RICS guidelines on how you assess the market value of the property. Why you're doing so doesn't come into it.

And given all lenders will have criteria for types of construction they don't lend on, the surveyor will be checking for non-standard construction (assuming it's an in-person valuation). So if the bank hasn't rejected it for such a reason, you can presume the surveyor was happy.