Mortgage Surveys – What you need to know
Why do I need a survey?In order to obtain a mortgage, all residential properties have to undergo a basic valuation survey, which is ordinarily carried out by the mortgage lender. This is to ensure that your chosen property is worth the asking price. Sometimes this is included in the cost of the mortgage arrangement fees, however, other lenders may add a separate valuation fee.
Whilst a basic valuation will pick up any immediate risks to your finances or personal safety, it’s intention is to protect the mortgage lender’s interests, rather than yours, as home buyers. It is sometimes sufficient for new build homes, but in most cases, arranging additional independent surveys is strongly advisable. These will not only offer you further detail for added peace of mind about the condition of your new home, but can sometimes identify opportunities to negotiate the asking price down.
Types of survey available
Basic valuation / mortgage valuationThis is an essential aspect of any mortgage and lenders will not approve your mortgage application until this survey has been carried out to their satisfaction. This is usually carried out by your mortgage lender and therefore it may be done without your knowledge.
According to the Royal Institute of Chartered Surveyors, only one in five homebuyers sees the report provided to the mortgage lender. This is an important part of the homebuying process and you should ask your lender for a copy of the report if it is not readily offered.
This type of survey will identify more immediate issues with the property, such as areas where the property does not meet legal standards, for example, electrical outlets. It’s predominant goal, however, is to confirm the overall value of your new home, to ensure that you are getting what you pay for.
This type is rarely detailed enough, unless your home is a newly built property. For most buyers, a more thorough home survey is recommended, to save you from unexpected future costs.
Homebuyers reportThis type of survey is more thorough than a mortgage valuation survey. As well as a confirmed valuation report, it will also identify issues that require immediate attention and those that could need further investigation.
Any structural problems or legal issues with the property will be highlighted, as well as hidden issues, such as damp and costly repairs. A report will list any findings, alongside suggested repair and maintenance costs to rectify these issues.
Where there are significant issues or costs discovered, these are likely to impact the surveyors overall valuation of the property. The confirmed valuation report can then be used to negotiate a lower asking price. For example, where you will need to pay £10,000 towards roof repairs, you can ask for a price reduction to account for this.
You will also receive a total rebuild cost for the property, which you will need in order to ensure that your buildings insurance policy is adequate.
Full building surveyA full building survey (or full structural survey) is the most comprehensive type of survey and therefore, the most expensive. It’s worth noting, however, that a valuation is not ordinarily included with this report.
You should always ensure that the survey you choose is based on the condition of the property, so for older properties and those in obvious need of repairs, a full building survey is recommended.
A building survey goes behind the obvious and suggests potential future issues. For example, it will go so far as to list the building materials used in the construction of the property and how much longer they are likely to last.
It provides a more detailed inspection of the house, beyond the basic structural walls, ceilings and floor issues, such as potential wiring, gas and plumbing upgrades and insulation requirements. There will be a full list of suggestions to rectify the highlighted issues, as well as cost estimates for necessary works. Whilst you won’t have an overall valuation, these costs can still be used to negotiate the price down, especially where they are significant.
Additional reportsWhere issues (or potential issues) are highlighted on the reports listed above, you may also want to organise specific additional survey reports in the following areas:
- Damp reports
- Electrical reports
- Gas reports
- Asbestos reports
- CCTV report
- Drain reports
- Tree resorts
- Party wall reports
The cost of a surveyThe cost of property surveys will depend on both the value of the property and the depth of report. For a basic mortgage valuation, this is sometimes included in the general mortgage application fee, but where lenders do charge, this will rarely be more than £250.
Where you organise an independent survey, there will be some variation between firms, as surveys are not standardly priced services, however, you could expect to pay the following, on average.
- Properties up to £249,000 – £540
- Properties between £250,000 and £349,000 – £625
- Properties between £350,000 and £600,000 – £695
- Properties over £600,000 – £695+
Full Building/Structural Survey
- Properties up to £249,000 – £740
- Properties between £250,000 and £349,000 – £850
- Properties between £350,000 and £600,000 – £940
- Properties over £600,000 – £1090+
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