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What is a mortgage valuation and how does it work?

When you apply for a mortgage, your lender will usually arrange a mortgage valuation of the property.

We explain what a mortgage valuation involves, what happens if the valuation is less than expected, valuation costs and how a mortgage valuation differs from a property survey.

What are mortgage valuations used for?

Mortgage valuations are carried out for the benefit of the lender to:

  • confirm the property’s value

  • help them decide if the property will be a suitable security for the loan you’ve applied for

A mortgage valuation also helps the lender work out the loan-to-value (LTV) ratio – the amount you want to borrow in relation to the value of your home. The LTV determines the mortgage rates you are eligible for.

It’s important to note that a mortgage valuation is carried out for the lender’s purposes only and not on your behalf.

What does a mortgage valuation survey involve?

Mortgage valuations are arranged by the lender. They’re completed by a qualified surveyor who may not need to visit the property. For example, they may carry out desktop or automated valuations using various tools or data.

The valuation can be done fairly quickly, often within 1 to 2 weeks. The lender will then use the mortgage valuation to help decide if the property is a suitable security for the loan you’ve applied for.

A valuation and a mortgage lending decision are independent of each other. Once the lender is happy with both, they will usually make you a mortgage offer. 

What happens if the mortgage valuation is less than the property price?

If the mortgage valuation is less than price you are paying for the property, or your estimate of its value, this is usually called a ‘down valuation’. If this happens, it doesn’t necessarily stop you from getting a mortgage or remortgaging.

If the property is given a down valuation, the mortgage lender may reduce the amount of money they are willing to lend you. You may also be unable to borrow at the same interest rate. 

How much does a mortgage valuation cost?

Mortgage valuation fees can vary, depending on the type of property.1 Some lenders, including HSBC, may not charge this fee on certain mortgage deals.

What is a property survey?

While a mortgage valuation provides the value of the property for the lender, a property survey would report on the condition and, sometimes, the market value of the property for you.

It’s a very good idea to arrange for a property survey to be done on your behalf when buying a home, to flag any potential problems.

You can choose the type of report you’d like, depending on how much detail you need:

  • RICS Condition Report – the most basic type of survey

  • RICS HomeBuyer Report – a more detailed inspection of the inside and outside of the property

  • Building or full structural survey – the most comprehensive type of survey

Buyers in Scotland can also request a free Home Report from the seller – this contains an energy performance certificate, a property survey and questionnaire. 

Depending on the age and condition of the property, some lenders may request that specialist reports are carried out. For example, damp, timber or drain inspections. 

Visit the Royal Institution of Chartered Surveyors (RICS) website to find a surveyor near you.

Keep in mind

You must not rely on a mortgage valuation when buying a property

A mortgage valuation is based on a limited inspection of the property and, sometimes, only a ‘desktop’ report is carried out with no physical inspection. The report is also for the lender’s mortgage purposes only.

It's a very good idea to get a property survey done on your behalf

This will report on the condition of the property for you and make you aware of any essential, and potentially costly, repairs that may be required.

Mortgage lenders have their own criteria

Some properties may not meet your lender’s requirements for a suitable mortgage security. For example, homes made of non-standard materials like pre-fabricated concrete or wood. You should check a lender’s requirements before applying for a mortgage.

Buildings insurance is a condition of the mortgage

Buildings insurance can protect you against the cost of repairing or rebuilding your home, should it get damaged by an insured risk. You’ll need to have buildings insurance in place when you exchange contracts, or when remortgaging. But, you can take this out with a provider of your choice.


1The Money Advice Service: A guide to mortgage fees and costs