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Kelsey’s guide to mortgages and home loans, for beginners


Mortgage survey guide

Before any mortgage application will be considered by a lender they will require evidence that the property being bought is worth what you are proposing to pay for it. This is to ensure that should you fail to make the payments on time and they end up having to repossess the home they can be assured that its resale value would be sufficient to clear any mortgage loan outstanding at the time.

There are three types of mortgage survey or valuations available for borrowers to consider. They rise in cost but also the amount of information gleaned under each can be a valuable asset in helping to decide if the property is sound or needs major works completed.

The most basic level of survey is the Basic Mortgage Valuation. This is always completed by an independent valuer familiar with the area in which the property is located. Whilst some lenders provide this basic valuation free many charge a fee and this can increase with the cost of the property. This type of survey does not provide any information as the structural soundness or otherwise of the building and is merely an expression of the current value of the property in the current market. Lenders may advance only a certain specified percentage of this value despite whet you have agreed to pay for the property.

The next level of survey is the Homebuyers Report. This is a more detailed survey and is completed to a standard template devised by the Royal Institute of Chartered Surveyors. Whilst this report does contain more detail on the fabric of the building it does not attempt to cover electrical wiring, drainage or gas appliances. For most building that appear in reasonable condition and are less than 150 years old this survey gives both purchaser and mortgagor a good picture as to the state of the property. This survey is usually conducted at the same time as the Basic Mortgage Survey. The outcome is a report that will detail the condition of outbuildings (such as garages) and the energy efficiency of the home. Homebuyers reports can be commissioned directly by you so the price is negotiable. For it to be acceptable to the lender the surveyor must be suitably qualified. Expect to pay many hundreds or low thousands of pounds depending upon the size of the property.

The most detailed, thorough and comprehensive report is gained by commissioning a Full Structural Survey or Building Survey. Whilst these may be reserved for older or more unusual properties that can be useful for building located in areas with known subsidence or other issues. There is no standard format so the surveyor, in discussion with you, will decide the content and which areas, if any, to focus. Since the cost and level of investigation is far higher it is suitable for any property but is mainly reserved for restored or renovated buildings or those that have become dilapidated over time. Costs are negotiable but will range up to many thousands of pounds depending upon the size of the property being inspected and the level of wok commissioned.

Where the property being purchased is a new build no survey is required. The lender will rely upon a valuation report and various guarantees and warranties given under the National House Builders Certificate. Although these apply to around 80% of all new homes built your lender may insist on such a cover as protection against material build quality failures.

Different lenders have slightly different requirements on surveys. Therefore it is always worthwhile checking before commissioning a survey as to the requirements of the prospective lender. A quick and easy comparison of current mortgage terms and details can be found through Moneysupermarket.



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