Lenders are the one who lends money, so you can buy your new home or the property of your choice. But before all this, lenders want to do mortgage valuation survey of the property that you are willing to buy. The mortgage valuation is in the favour of lender’s only, first they ask the property valuer to analyse the property, just to know the actual market value of the property and about the investment they(lenders) are making is right or not.
What is lender’s valuation - Lender ask the qualified property valuer to visit and find the right market value of the property, (which buyers want to buy). After getting assurance from the valuer, lender lends the money.
Usually, the mortgage valuation report is not more than two-three pages. And mainly prepared for the benefit of the money lender.
Valuer is being hired to know that - Property should not be in high risk zone. If the property is of right price at right place then lender lends the money for it. If property is not appropriate as per the lender’s set benchmarks then it might possible, they refuse your mortgage request.
What are the key things to consider while doing mortgage valuations
During the inspection the two things valuer should look for - The surveyed property cost should be equal to the amount of loan, applied for and second to check the structure durability of the property.
If the cost of the property is lower than the amount of the mortgage loan then lender will not lend the money. Also if the building structure is not that strong and property has not guarantee in coming years than money lender will show least interest in lending the loan against that property.
For example - The borrower gets for the loan of $50,000 against a property which costs $40,000 and if borrower is not able to pay back the loan amount than property that cost $40,000 will be sold out by the money lender (to recover the money). This leads to have a serious loss to money lender. To stay away from such troubles, money lenders ask for mortgage valuation.
Who will pay for mortgage valuation and how much does it cost - It depends on the lender. Some money lenders offer free mortgage valuation to attract borrowers for taking mortgage loan from them. Whereas in some cases, borrower has to pay for mortgage valuation. Though the cost of this kind of valuation varies and completely depends on the property valuer, size and value of the property.
How it is different from house valuation - House valuation is basically performed on the request of the owner who wants to sell the property or having other reasons of valuation like - to know the actual cost of the property, to know the amount paid in insurance premium & house taxes. Thus the homeowner calls the property valuer to determine the actual market value of the property and ask valuer to prepare the complete analysis report of the property along with details.
Whereas, the mortgage valuation is done on the demand of money lender to know the right value and the structure strength of the property. So lender can provide money to borrower against that property. Mortgage valuation is done to get the assurance before lending the money to the borrower.
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