Mortgages: surveys and valuations explained

Here’s a straightforward guide to help you understand the difference, what options you have, and why each matters when you’re arranging a mortgage.

What’s a mortgage valuation?

When you apply for a mortgage, the lender will want to check the property’s value. This is called a mortgage valuation, and it’s mainly for their peace of mind.

The valuation confirms that the property is worth the amount you want to borrow, so the lender isn’t lending you more than the home is actually worth. It’s usually a quick check and doesn’t give you much detail about the condition of the property; it’s mostly about price.

The valuation is typically arranged by your lender, but you will likely pay for it unless the lender offers a free valuation.

What are home surveys?

Surveys go further than valuations by looking closely at the condition of the property. They can spot issues from structural problems to damp or outdated wiring, helping you avoid surprises down the line.

As a buyer, you arrange and pay for the survey. You can usually choose from different levels of surveys, depending on how much detail you want and how much you’re willing to spend.

• Level 1 - Basic condition report: A quick look highlighting urgent issues and general condition.

• Level 2 - Homebuyer’s report: A more detailed check covering the main parts of the home.

• Level 3 - Full structural survey: The most thorough option, ideal for older or unusual properties.

If you’re buying a straightforward, newer home, a basic survey might do the job. For older or bigger properties, spending a bit more on a full survey can be a smart move.

While the lender cares about the valuation to assess their risk, the survey is all about protecting you as a buyer. If a survey flags serious problems, you might be able to negotiate a lower selling price with the seller - or even walk away if the issues are too big.

How much do home surveys and valuations cost?

As we’ve seen above, when you buy a home you’ll typically need two key checks: a mortgage valuation (for the lender) and a home survey (for your own peace of mind). Here's how much they typically cost in the UK:

Mortgage valuation

Usually arranged by your lender to confirm the property’s value against your mortgage. As it’s a basic check, prices generally range from around £150 to £800, depending on your lender and how big or pricey your property is.

Home surveys

Survey levels and costs vary based on how much detail you want and the type of property. According to the government website Money Helper, these are the sort of costs you can expect to be looking at for RCIS (Royal Institution of Chartered Surveyors), depending on the level of survey you choose:

• RICS Home Survey Level 1: Covers visible defects and serious risks. Typically costs around £380, rising for higher-value homes.

• RICS Home Survey Level 2: Offers a condition rating, repair advice, and may include valuation. Costs usually come to around £400 but can be higher depending on your property.

• RICS Home Survey Level 3: A full structural survey, typically for older, larger or unusual properties. Prices typically start from £600, and can exceed that for high-value or prime-location homes.

Remember, costs for surveys can vary depending on:

• Property value and size: Bigger, more expensive homes take longer to inspect.

• Location: Surveys in London and the South East tend to be pricier.

• Type of survey you choose: More detailed reports naturally cost more.

Choosing a RICS-accredited surveyor

When selecting a surveyor, it's crucial to ensure they are accredited by the Royal Institution of Chartered Surveyors (RICS). RICS members adhere to strict professional standards and codes of practice, providing you with confidence in the quality and reliability of the survey report. This accreditation is especially important if you're considering a Level 3 survey, as it offers the most comprehensive assessment of a property's condition.

Opting for a RICS-accredited surveyor ensures that the survey is conducted by a qualified professional, capable of identifying potential issues that could affect the property's value or your decision to proceed with the purchase.

Final points to consider

Both surveys and valuations play crucial roles when buying a home with a mortgage, but they serve different purposes. The lender’s valuation focuses on confirming the property’s market value to make sure it’s worth the loan amount. It’s mainly for the lender’s protection, so they know their investment is secure.

On the other hand, your chosen survey, whether it’s a basic homebuyer’s report or a full structural survey, gives you a much deeper insight into the condition of the property. It can highlight potential issues like damp, structural problems, or repairs you might need to budget for down the line.

Picking the right survey for your situation and budget may help you avoid costly surprises and give you peace of mind before you commit. After all, buying a home is a big deal – getting the right information up front helps you make a confident decision that’s right for you.