Mortgage Valuation Process: A property may feel like a home to the buyer. However, the lender must first consider it as mortgage security.

That difference explains why mortgage valuations matter.

A lender needs confidence that the property offers reasonable security for the requested loan. The valuation helps establish its market value, suitability and resulting loan-to-value ratio.

It can also identify property features which require further investigation before the lender makes its decision.

How Does a Mortgage Valuation Work?

A mortgage valuation is arranged by the lender after receiving a full mortgage application.

The lender may use:

• An automated valuation model.
• A desktop valuation.
• A drive-by assessment.
• A physical property inspection.

The valuation primarily protects the lender. It is not a detailed survey of the property’s condition.

The result may:

• Support the agreed purchase price.
• Produce a lower valuation.
• Identify repair or construction concerns.
• Require specialist reports.
• Lead to a retention or revised mortgage amount.
• Confirm whether the property is acceptable security.

A satisfactory valuation does not guarantee mortgage approval. The lender must still complete its wider underwriting checks.

What Is a Mortgage Valuation?

A mortgage valuation is an assessment of a property for lending purposes.

The lender uses it to consider whether the property provides suitable security for the mortgage. It also helps the lender calculate the loan-to-value ratio.

Loan-to-value, usually shortened to LTV, compares the mortgage amount with the lender’s property valuation.

For example, a £180,000 mortgage against a £200,000 valuation produces a 90% LTV.

A lower valuation could increase the LTV. This may affect the mortgage amount or product originally selected.

Our mortgage jargon guide explains LTV and other common mortgage terms.

Who Arranges the Mortgage Valuation?

The mortgage lender normally arranges the valuation.

It may instruct an independent surveying firm or use a valuer from its approved panel. Applicants generally cannot choose the lender’s valuer.

The lender also decides which valuation method is suitable.

This decision may reflect:

• The property type.
• The property’s location.
• Available market data.
• The requested mortgage amount.
• The loan-to-value ratio.
• The property’s age and construction.
• The lender’s internal risk policy.

Some mortgage products include a basic valuation without a separate charge. Others require the applicant to pay a valuation fee.

The overall mortgage cost should still be considered. A free valuation does not automatically make one mortgage cheaper than another.

What Types of Mortgage Valuation Can Lenders Use?

Valuations do not always involve a surveyor entering the property.

During the period covered by this April 2023 guide, lenders could use several valuation methods.

Automated valuation model

An automated valuation model uses property information and market data to estimate a value.

This method may be used where the lender has enough reliable data about the property and surrounding area.

It can reduce the time required for a valuation. However, it may not be suitable for unusual or complex properties.

Desktop valuation

A desktop valuation is completed remotely by a valuer.

The valuer may review:

• Land Registry information.
• Previous sale prices.
• Comparable local properties.
• Property listings.
• Mapping information.
• Available property records.

No internal inspection usually takes place.

Drive-by valuation

A drive-by valuation involves an external inspection of the property.

The surveyor may assess the location, general appearance and surrounding area without entering the building.

Physical valuation

A physical valuation involves a surveyor visiting the property.

The inspection remains limited because its purpose is mortgage security. It does not provide the same detail as a buyer-commissioned condition survey.

The lender may require a physical inspection for:

• Non-standard construction.
• Unusual property types.
• Rural or isolated properties.
• Flats with complex lease arrangements.
• Properties with limited comparable data.
• Buildings showing possible defects.
• Properties undergoing significant works.

What Does the Mortgage Valuer Check?

The exact assessment depends on the valuation method and lender instructions.

The valuer may consider:

• The property’s estimated market value.
• Recent sales of comparable properties.
• Its location and surrounding area.
• Property type and construction.
• General condition visible during the inspection.
• Signs of structural movement.
• Damp or significant disrepair.
• Remaining lease length.
• Access arrangements.
• Planning or usage concerns.
• Saleability within the local market.
• Whether the property is suitable mortgage security.

A valuation is not a building guarantee. It may not identify hidden defects or every repair requirement.

RICS explains the difference between a lender’s valuation and a detailed home survey.

Connect Mortgages also provides a separate guide to understanding property surveys.

Is a Mortgage Valuation the Same as a Property Survey?

No. They serve different purposes.

A mortgage valuation helps the lender assess its security. A property survey helps the buyer understand the building’s condition.

A survey may provide more detail about:

• Structural movement.
• Roof condition.
• Damp.
• Insulation.
• Windows and doors.
• Drainage.
• Repairs.
• Ongoing maintenance.

Buyers should not assume that a satisfactory lender valuation means the property has no defects.

A valuation asks whether the property is acceptable security. A survey asks what the buyer may be purchasing.

That distinction is practical and philosophical. Value concerns the transaction, while condition concerns the building itself.

What Is a Down Valuation?

A down valuation occurs when the lender’s valuation is lower than the agreed purchase price.

For example, a buyer may agree to pay £250,000. The lender’s valuer may assess the property at £235,000.

The lender will normally calculate its mortgage against the lower figure.

This could mean the buyer must:

• Provide a larger deposit.
• Renegotiate the purchase price.
• Select a different mortgage product.
• Request a lower mortgage amount.
• Reconsider the purchase.

A down valuation does not necessarily mean the seller’s price is unreasonable. It means the lender is not prepared to rely on that figure for mortgage-security purposes.

Comparable evidence, local demand and property condition may all influence the result.

Can You Challenge a Down Valuation?

Some lenders permit valuation appeals. Their requirements vary.

An appeal may need strong evidence rather than a general disagreement.

Useful evidence could include:

• Recent comparable sales.
• Similar properties within the immediate area.
• Evidence of completed improvements.
• Accurate floor-area information.
• Details correcting a factual error.

Properties used as evidence usually need to be genuinely comparable. Asking prices may carry less weight than completed sales.

An appeal does not guarantee that the valuation will change.

A mortgage adviser can ask the lender about its appeal process and evidence requirements.

What Happens When the Valuer Identifies Repairs?

A valuer may recommend further investigation where a possible defect affects mortgage security.

The lender could request:

• A structural engineer’s report.
• A damp and timber report.
• A roof inspection.
• An electrical report.
• Evidence of building regulations approval.
• Planning documentation.
• A specialist construction report.

The lender may also apply a retention.

A retention means part of the mortgage is withheld until specified work is completed. The lender may require a further inspection before releasing the retained amount.

The buyer must understand how any shortfall will be funded before exchanging contracts.

What Happens After the Mortgage Valuation?

The valuer sends the report to the lender.

The lender then reviews the valuation alongside the remaining application information.

The possible outcomes include:

• The property is accepted at the expected value.
• The property is accepted at a lower value.
• Further reports are required.
• Repairs must be completed.
• A retention is applied.
• The property is declined as mortgage security.
• The application returns to underwriting.

The UK mortgage approval process explains how valuation fits between the full application and mortgage offer.

A satisfactory valuation is important. However, the lender must still approve the applicant’s income, affordability, credit position and supporting documents.

How Long Does a Mortgage Valuation Take?

The timeframe depends on the property and valuation method.

An automated or desktop valuation may be completed quickly. A physical inspection depends on surveyor availability and access to the property.

Delays may occur where:

• The estate agent cannot provide access.
• The property is unusual.
• Comparable sales evidence is limited.
• Specialist reports are required.
• The valuer requests more information.
• The lender needs a reinspection.

Applicants should avoid making irreversible commitments until their solicitor and mortgage adviser confirm the appropriate stage.

Are Valuations Different for Remortgages?

A lender may also value a property during a remortgage.

The valuation helps determine:

• The available equity.
• The current loan-to-value ratio.
• Product eligibility.
• Whether additional borrowing is possible.
• Whether the property remains acceptable security.

Homeowners considering a new lender can read our guide to remortgage options.

The valuation may be automated where sufficient property data is available. More complex cases may require a physical inspection.

How Can Buyers Prepare for the Valuation Stage?

Applicants cannot control the valuation result. However, they can prepare for possible outcomes.

Before proceeding:

• Keep enough savings for unexpected costs.
• Research comparable local sale prices.
• Ask what type of valuation the mortgage includes.
• Consider arranging an independent survey.
• Check whether the property has unusual construction.
• Review the remaining lease term for a flat.
• Keep planning and building documents available.
• Avoid assuming the agreed price will be accepted.

First-time buyers can also review the wider first-time buyer mortgage process.

Connect Lifetime Mortgages provides further information about first-time buyer costs and lender checks.

Does the Property Need Buildings Insurance?

Most lenders require suitable buildings insurance from exchange of contracts or completion, depending on the transaction and lender requirements.

The policy should normally cover the rebuilding cost rather than only the property’s market value.

Buildings insurance is separate from the mortgage valuation. However, both relate to the lender’s security.

Read more about buildings and contents insurance.

Speak to a Mortgage Adviser

A mortgage valuation connects the property with the lending decision.

The buyer sees a future home. The lender sees security for a long-term financial commitment. Both perspectives matter.

Clear preparation can help you understand the result, respond to any conditions and avoid unnecessary delays.

Connect Lifetime Mortgages also explains how property value and borrowing interact within its mortgage affordability guide.

Speak to Connect Mortgages before applying if you need help understanding valuation requirements, lender criteria or your mortgage options.

Contact a mortgage adviser

Mortgage Valuation FAQs

Does a mortgage valuation mean my mortgage is approved?

No. The lender must still complete its underwriting and affordability checks.

Will I receive a copy of the valuation?

This depends on the lender and valuation type. Some lenders provide limited information, while others may not issue the full report.

Can a property pass a valuation but still need repairs?

Yes. A lender valuation is not a detailed condition survey.

Who pays for the mortgage valuation?

This depends on the mortgage product. Some lenders include a basic valuation, while others charge a fee.

Can the valuation affect my mortgage rate?

It can affect the calculated LTV. A different LTV may change the products available.

Can the lender refuse the property?

Yes. A lender may decline a property which falls outside its security or construction criteria.

Do I need another valuation when remortgaging?

The new lender normally needs to establish the property’s current value. It may use an automated, desktop or physical valuation.

Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured on it.