Some weeks there is just too much news to take in and it can be difficult to assimilate and decide which to report on. Then there are quiet weeks where nothing much seems to happen. This week has been the latter and the mortgage market has been quieter than normal. So, what to discuss? Surveys!
Valuations on properties to be mortgaged come in various guises. Every mortgage lender will require a valuation on the property to ensure the property is suitable security for their purposes. Although, in some cases, they will not actually visit. This is because they can often access detailed information electronically, normally called an Automated Valuation Model (AVM). Of course, this can prompt a borrower, who has paid a fee, to question the reasonableness of this method. In fairness to the lenders, it is a tried and tested system and rarely proves incorrect. They have expenses regardless of the visit and this system does have the effect of keeping prices down.
Remember that this, fairly basic valuation is for the lender, paid for by the borrower, and it should not be relied upon as a guarantee that the property is sound and fit for purpose. It only responds to the questions lenders ask relating to the property being suitable security for mortgage purposes. They have no obligation to tell you what is in the report, or give you a copy! Therefore you should always consider the benefit of an independent survey on the property you are purchasing to ensure that any and all defects are noted before signing contracts. There are two main types of survey available, aside from the mortgage valuation.
Homebuyer Report – a standard format set out by the Royal Institution of Chartered Surveyors (RICS). This will not focus on every aspect of the property as a building survey will (below), but will advise on urgent matters needing attention. It may advise if items (a leaky roof for example) might have an adverse affect on the value of the property, or if further investigations are required.
A Building Survey – an in-depth survey for all properties: listed buildings: buildings that have had extensive alterations, or of an unusual construction. The surveyor will examine all accessible parts of the property and advise on technical information: the condition relative to age: further special investigations required, and provide extensive information on major or minor defects.
Both will comment on whether the agreed asking price is reasonable, whether it reflects the condition of the property and should give you peace of mind whilst making the biggest purchase of your life!