What is a house valuation for a mortgage?

Taking out a mortgage to buy a new home requires a property valuation or appraisal, also known as a house valuation survey. That’s the process of determining a property’s market value to let the mortgage lender know if approving a particular loan is a wise investment. At Property Price Advice, you can get a free house valuation before the mandatory appraisal to get an accurate estimate of your desired home’s value. That way, you’ll have a clear idea of what to expect once a licensed appraiser checks the property. We have an extensive database of local property prices, including the latest sold prices of UK homes, so our valuation calculator can estimate how much your potential home is worth in minutes. The calculator’s proprietary algorithm will compare your chosen property against similar homes in the area, including their asking and sold prices, thus providing you with an instant but ultimately reliable estimate. Before you make an offer on a home that you would like to finance with a mortgage, you should learn what a house valuation for a mortgage is. Read on to find out why you need it, how it works, and everything else that it entails.

Why do you need a house valuation to get a mortgage?

Your lender will require your future home’s appraisal to estimate if their investment would be viable. As such, the process primarily benefits your lender. They want to confirm that your offered amount reflects the property’s market value so that they don’t end up lending you too much money. Ensuring that the property’s value covers the loan is their top priority. Additionally, they want to quickly resell the property and recoup the outstanding mortgage amount if you default on your loan. Defaulting on your mortgage loan gives the lender the right to foreclose on it. They can take possession of your home because they’re basically its owner. Until you pay off your mortgage, you don’t own your home. A home appraisal is beneficial to you as well. It can keep you from borrowing more money than you may need and help you negotiate a better price if the appraised one is lower than what you’ve agreed to pay.

What does a mortgage valuation determine?

It determines a property’s market value based on its location, size, age, features, and overall condition. It’s a rough estimate of how much the property may be worth that may not reflect its real value. Why not? Because appraisers don’t consider every little detail of a home to determine its real value. They consider only the key features to get a ballpark figure that will help the lender make an informed decision. Still, they are legally responsible for all their findings, so they must provide a report based on facts. That’s why they don’t rely only on their real estate knowledge and expertise. They dig deeper into recent comparable sales in the area to make a data-based decision. They charge a fee for their service, which falls to the buyer to cover.

What does it exclude?

Since this isn’t an in-depth assessment of a property, it doesn’t uncover potential issues, hidden problems, or anything that may require urgent repairs. Home appraisers only highlight severe defects or visible signs of damage that may affect the price. They don’t check for subsidence since their job doesn’t include a thorough structural assessment. If there are visible structural faults, they will use that information to determine a particular home’s value. Their reports don’t include information on any additional issues that they may have uncovered. They don’t inform you of your desired home’s overall condition to help you decide whether to proceed with the purchase or walk away from the deal. As such, mortgage valuations may not be enough to help homebuyers make the right decision. There may be hidden problems that will require extensive and costly repairs in the future. You wouldn’t know about them if you relied only on the appraisal process. That’s why you should consider getting a home survey, too.

Why do you need a home survey?

Getting a home survey is one of the smartest steps you can take to ensure your investment is worth it. A licensed surveyor will uncover any potential problems, offer expert advice on any necessary repairs, calculate repair costs, and suggest any further inspections. Make sure you choose a licensed and qualified surveyor who is registered with the RICS (Royal Institution of Chartered Surveyors), as that’s one of the most reputable central accrediting bodies for home surveyors in the UK. You can pick from three different RICS home surveys: Condition Report; Homebuyer Report; Building Survey. A Condition Report and a Homebuyer Report are very limited, as they provide nearly the same information as a property valuation. The former highlights only major potential problems, while the latter informs you of any signs of subsidence, too. A Buying Survey is your go-to choice if you want to get an in-depth structural assessment of your future home. It includes comprehensive information on every nook and cranny (including potential signs of subsidence) to help you understand what kind of problems or potential problems the structure is facing.

How do mortgage lenders determine house value?

Lenders rely on professional real estate appraisers to determine how much a particular home is worth. Those appraisers are independent parties who carry out unbiased assessments. When an appraiser visits a specific structure, they consider its location, size, age, and overall condition to estimate its market value. They inspect both the exterior and interior to check all the essential features and look for any apparent damage or defects that may influence the price. Armed with that information, they compare the home to similar neighbouring properties, taking into account their prices and current market trends. They use comparative sales data, too, to evaluate the home against those that were recently sold in the area. At Property Price Advice, you can check the latest sold house prices in your desired area so you can get an idea about the price range for similar real estate. Thanks to the latest HM Land Registry data and up-to-date market data, you can get the accurate information necessary for making an educated purchasing decision.

When does the valuation take place when buying a home?

An appraisal takes place after you’ve made an offer on a home but before you’ve signed the purchase agreement. That’s the only way to make sure you don’t get stuck in a deal that you can’t afford. If your lender denies your loan, you may have to back out of the deal. If they offer a revised mortgage because the appraised price is lower than the sale price, you can try negotiating a better one with the seller. None of this can happen if you’ve signed the purchase agreement already because that contract is legally binding.

What happens during a home valuation for a mortgage or refinance?

Every licensed appraiser begins evaluating a property by inspecting the exterior. They check the land’s size and condition, garage, ease of access for vehicles, and any decks, porches, in-ground pools, or outbuildings that the property may have. As for the interior, they inspect all the amenities (including the number of bedrooms and bathrooms) and check for any remodelled rooms and special features. They inspect the doors, windows, closets, basement, fittings, fixtures, design and layout functionality, electrical wiring, plumbing, HVAC systems, and look for any improvements or upgrades (e.g., built-in appliance upgrades or basement conversions). The home’s construction (e.g., traditional, modern, or unusual), building materials, and architectural style play a role as well, together with the general structural integrity (without digging deeper into the structure and checking for subsidence). If there are any major visible defects or damage, such as serious structural faults, pests, rot, or faulty wiring, the appraiser will make a note of it, as such issues may impact the home’s price. During the appraisal, they take photos of the home to highlight its key features and any significant problems that it may have. The process is the same when it comes to refinancing your mortgage or taking out a home equity loan. The only difference is that your lender will use the appraisal to find out if your home’s value has increased or decreased and tell you how much equity you might be able to borrow against it. You may be eligible for a better mortgage with a lower interest rate or a favourable cash-out refinance deal if it has increased.

How long does a mortgage valuation take?

A mortgage valuation typically takes 10-20 minutes, depending on the size of the property. It may take about half an hour for a larger property. The lender will receive a three-page appraisal report in 2-3 business days and start checking if the estimated value makes sense. Suppose the report has highlighted any serious issues. In that case, the lender will make a thorough risk assessment to determine whether it’s wise to approve your loan, offer a revised mortgage, or deny your application. From the moment the appraiser evaluates the home to the moment the lender completes their risk assessment, the entire process may take approximately two weeks.

What factors can devalue a home?

Any visible sign of damage or serious defects can lead to a down valuation. Cracks in the walls, ceilings, or foundation, roof leaks, poor plumbing, electrical or structural faults, and even clutter can devalue a home. The same goes if its exterior is unappealing and inconsistent with other houses in the neighbourhood. All in all, if it has been poorly maintained and may require extensive repairs or improvements, it can get devalued. Current market trends play their part as well. For instance, if real estate prices in your desired area are falling faster than in other areas, then the appraiser may conclude that the price you’ve agreed to pay may be significantly higher than the property’s current value. The seller may have a different opinion, but they don’t have access to up-to-date market data.

What if the mortgage valuation is too low?

A down-valued property leads to a higher LTV ratio, which means a higher interest rate. That’s because the lender considers your loan to be a risky investment. If you default on it, they could lose a lot of money, as they wouldn’t be able to resell the property at a higher price. If the estimated value is far lower than your agreed sale price, the lender may even deny your loan application. That typically happens when the LTV ratio is much lower than 60%. If they don’t deny it, you should first renegotiate the price with the seller. Knowing that market professionals don’t agree with the price, they may not want to risk you walking away from the deal or losing other potential buyers so that they may lower the sale price. Another thing you can do is dispute the appraisal, as long as you have evidence that the appraiser didn’t do a proper job and the home is worth more than the appraised value. You can do that by writing a letter of appeal to the lender. If they determine that your appeal has merit, you can choose whether to get the original appraiser to reconsider or get a second opinion from another independent appraiser. If all else fails and your deal falls through, make sure you keep a watchful eye on the property because the seller may struggle to get better offers and contact you to renegotiate again.

Where can I find a house appraisal calculator?

You can use our free online calculator for valuing UK properties, as it will provide you with an accurate estimate at no cost. Our proprietary calculator uses complex algorithms to take into account multiple factors, such as current market conditions and the latest Land Registry data, including comparative sales data regarding similar properties in the specified area. To get an accurate estimate of your desired home’s value, enter the postcode, specify the home’s key features, such as the room count, and share your email address so we can send you a copy of the report. You’ll get an estimate straight to your inbox within minutes. If you need help determining how much you can afford to spend on your new home, you can use our free Budget Calculator. It can help you establish your budget within minutes and make a smart purchasing decision. All you need to do is specify your gross annual income, age, and deposit amount and tell us how soon you would like to move to a new home. Based on your criteria, the calculator will estimate your budget and pull the necessary data for helping you find your dream home. It will provide you with a list of available properties in your desired area that match your specified criteria, along with the best mortgage deals from our mortgage partners at Shop Around Finance. They offer an array of useful services for homebuyers, including free mortgage advice and expert tips for buying and moving into your new home.

Property News | Property Price Advice

Are We Seeing the Rise of the Outer Commuter Belt?

19th August 2021

Investing in a Buy-to-Let property comes with many considerations, from choosing the …

Has the housing market got off to a good start and what does it have in store?

19th February 2021

2020 was an extraordinary year for the housing market as it responded …

Your monthly UK property market overview

20th October 2020

There is no doubt that 2020 has been an exceedingly interesting year …

London rentals in a post-COVID world: What might be in store?

15th September 2020

Much like many other large metropolitan locations, London has not been spared …

Your monthly UK property market overview

7th September 2020

There is no doubt that we are living in decidedly challenging times. …

Going green: What can UK homeowners expect?

23rd July 2020

We are already aware of the fact that the government of the …

A quick look at the most popular London commuter Towns

15th July 2020

London is famous for offering a host of living options; not the …

COVID-19 and UK Housing Prices

28th May 2020

Let’s first begin by addressing what can only be called the elephant …

Scottish house prices are continuing their steady growth

28th March 2018

Residential property prices in Scotland continue to increase, the latest figures show. …

How to add significant value to your home

28th March 2018

How to add significant value to your home A new study shows …

How much are homes located along the route of the Boat Race worth?

28th March 2018

How much are homes located along the route of the Boat Race …

House prices: North of England leads the way

8th March 2018

The Northern Powerhouse cities of Manchester, Leeds and Liverpool have become global …

Cookie	Duration	Description
_GRECAPTCHA	5 months 27 days	This cookie is set by the Google recaptcha service to identify bots to protect the website against malicious spam attacks.
csrftoken	1 year	This cookie is associated with Django web development platform for python. Used to help protect the website against Cross-Site Request Forgery attacks
JSESSIONID	session	The JSESSIONID cookie is used by New Relic to store a session identifier so that New Relic can monitor session counts for an application.
PHPSESSID	session	This cookie is native to PHP applications. The cookie is used to store and identify a users' unique session ID for the purpose of managing user session on the website. The cookie is a session cookies and is deleted when all the browser windows are closed.
viewed_cookie_policy	1 year	The cookie is set by the GDPR Cookie Consent plugin to store whether or not the user has consented to the use of cookies. It does not store any personal data.

Cookie	Duration	Description
_clck	1 year	No description
_clsk	1 day	No description
_te_	session	No description
aff_asset	2 months	No description
affiliate	1 month	No description available.
CLID	1 year	No description
cmmreferer	1 day	No description
grroute	session	No description
odclient	session	No description
QPRUN	session	No description
SM	session	No description available.

Cookie	Duration	Description
__adroll	1 year 1 month	This cookie is set by AdRoll to identify users across visits and devices. It is used by real-time bidding for advertisers to display relevant advertisements.
__adroll_fpc	1 year	AdRoll sets this cookie to target users with advertisements based on their browsing behaviour.
__adroll_shared	1 year 1 month	Adroll sets this cookie to collect information on users across different websites for relevant advertising.
__ar_v4	1 year	This cookie is set under the domain DoubleClick, to place ads that point to the website in Google search results and to track conversion rates for these ads.
_fbp	3 months	This cookie is set by Facebook to display advertisements when either on Facebook or on a digital platform powered by Facebook advertising, after visiting the website.
adrl	1 month	This cookie is set by Outbrain and is used to register data on the visitor to optimize advertisement relevance.
anj	3 months	AppNexus sets the anj cookie that contains data stating whether a cookie ID is synced with partners.
ANONCHK	10 minutes	The ANONCHK cookie, set by Bing, is used to store a user's session ID and also verify the clicks from ads on the Bing search engine. The cookie helps in reporting and personalization as well.
c	1 year	This cookie is set by Rubicon Project to control synchronization of user identification and exchange of user data between various ad services.
CMID	1 year	Casale Media sets this cookie to collect information on user behavior, for targeted advertising.
CMPRO	3 months	CMPRO cookie is set by CasaleMedia for anonymous user tracking, and for targeted advertising.
CMPS	3 months	CMPS cookie is set by CasaleMedia for anonymous user tracking based on user's website visits, for displaying targeted ads.
CMRUM3	1 year	CMRUM3 cookie is set by CasaleMedia for anonymous user tracking based on user's website visits, for displaying targeted ads.
CMST	1 day	Casale Media sets this cookie to collect information on user behavior, for targeted advertising.
fr	3 months	Facebook sets this cookie to show relevant advertisements to users by tracking user behaviour across the web, on sites that have Facebook pixel or Facebook social plugin.
i	1 year	This cookie is set by OpenX to record anonymized user data, such as IP address, geographical location, websites visited, ads clicked by the user etc., for relevant advertising.
IDE	1 year 24 days	Google DoubleClick IDE cookies are used to store information about how the user uses the website to present them with relevant ads and according to the user profile.
KRTBCOOKIE_10	3 months	This cookie, set by PubMatic, is used to build a profile of user interests and to show relevant ads.
MUID	1 year 24 days	Bing sets this cookie to recognize unique web browsers visiting Microsoft sites. This cookie is used for advertising, site analytics, and other operations.
PUBMDCID	3 months	PubMatic sets this cookie to store an ID that is used to display ads in the users' browser.
t_gid	1 year	Taboola sets this cookie by assigning a specific ID for attribution and reporting purposes and to tailor recommendations to the user.
test_cookie	15 minutes	The test_cookie is set by doubleclick.net and is used to determine if the user's browser supports cookies.
tluid	3 months	This cookie is set by the provider AdRoll to identify and show the visitor relevant ads by collecting user data from multiple websites.
tuuid	1 year	The tuuid cookie, set by BidSwitch, stores an unique ID to determine what adverts the users have seen if they have visited any of the advertiser's websites. The information is used to decide when and how often users will see a certain banner.
tuuid_lu	1 year	This cookie, set by BidSwitch, stores a unique ID to determine what adverts the users have seen while visiting an advertiser's website. This information is then used to understand when and how often users will see a certain banner.
uuid2	3 months	The uuid2 cookie is set by AppNexus and records information that helps in differentiating between devices and browsers. This information is used to pick out ads delivered by the platform and assess the ad performance and its attribute payment.

Cookie	Duration	Description
_ga	2 years	The _ga cookie, installed by Google Analytics, calculates visitor, session and campaign data and also keeps track of site usage for the site's analytics report. The cookie stores information anonymously and assigns a randomly generated number to recognize unique visitors.
_gat_UA-1031828-1	1 minute	A variation of the _gat cookie set by Google Analytics and Google Tag Manager to allow website owners to track visitor behaviour and measure site performance. The pattern element in the name contains the unique identity number of the account or website it relates to.
_gcl_au	3 months	Provided by Google Tag Manager to experiment advertisement efficiency of websites using their services.
_gid	1 day	Installed by Google Analytics, _gid cookie stores information on how visitors use a website, while also creating an analytics report of the website's performance. Some of the data that are collected include the number of visitors, their source, and the pages they visit anonymously.
APID	1 year	This cookie is set by Yahoo to store information on how users behave on multiple websites so that relevant ads can be displayed to them.

Cookie	Duration	Description
__cf_bm	30 minutes	This cookie, set by Cloudflare, is used to support Cloudflare Bot Management.
PugT	1 month	PubMatic sets this cookie to check when the cookies were updated on the browser in order to limit the number of calls to the server-side cookie store.

All The Latest Property News

Are We Seeing the Rise of the Outer Commuter Belt?

Has the housing market got off to a good start and what does it have in store?

Your monthly UK property market overview

London rentals in a post-COVID world: What might be in store?

Your monthly UK property market overview

Going green: What can UK homeowners expect?

A quick look at the most popular London commuter Towns

COVID-19 and UK Housing Prices

Scottish house prices are continuing their steady growth

How to add significant value to your home

How much are homes located along the route of the Boat Race worth?

House prices: North of England leads the way

What Else Can We Help You With?

Free Valuation

Budget Calculator

Sold House Prices

Remortgaging Calculator

Improving Your Home

Moving Home