Understanding the Difference Between a House Survey and a Mortgage Valuation

When buying a property, the terms “house survey” and “mortgage valuation” often cause confusion for buyers.

A widespread misconception is that once a valuation has been completed, a house survey is no longer necessary. This misunderstanding is common, especially since phrases like “mortgage survey” are still inaccurately used in everyday conversations.

As a result, many buyers rely only on the valuation, believing it provides sufficient information about the property’s condition and skip the survey. However, a house survey can uncover critical details that buyers should know before making such a significant investment.

This article explores the differences between the two, the role of professionals like RICS chartered surveyors, and why both are crucial when purchasing a home.

What is a Mortgage Valuation?

A mortgage valuation, often referred to simply as a valuation, is conducted primarily for the lender’s benefit. Its purpose is to confirm that the property is worth the amount the lender is offering to finance the purchase. A valuation is always completed before mortgage approval. While the valuer may briefly consider the property’s condition, the focus is primarily on aspects like location, size, and key features. Additionally, many valuations are conducted remotely without a physical inspection of the property.

A crucial point to remember is that a mortgage valuation is not a substitute for a detailed house survey. The lender’s interest is only in the value of the property and its marketability, not in identifying structural issues or potential problems.

What is a House Survey?

A house survey is a comprehensive assessment of a property’s condition, conducted by a RICS qualified surveyor. The surveyor inspects the property and provides a detailed report for the buyer, highlighting any issues, from minor concerns like blocked gutters to major structural problems such as subsidence, depending on the type of survey requested. The report also identifies necessary repairs or recommends further expert evaluations for potential problems, such as dampness or asbestos. Moreover, the survey offers expert insights on construction type and the adequacy of elements like the glazing.

Unlike the mortgage valuation, the house survey is tailored to the buyer’s needs and aims to uncover any problems with the property.

To determine which survey level is right for you, click the button below.

Key Differences Between a Mortgage Valuation and a House Survey

Feature	Mortgage Valuation	House Survey
Purpose	To assess the property’s value	To assess the property’s condition
Who benefits	Primarily the lender	Primarily the buyer
Who conducts it	Lender’s appointed surveyor	RICS qualified surveyor
Level of detail	Basic, focuses on value	Detailed, focuses on structural condition
Report	Sent to the lender (may not be shared with the buyer)	Sent to the buyer

Why You Shouldn’t Rely on a Mortgage Valuation

Many buyers mistakenly assume that a mortgage valuation provides a complete assessment of a property’s condition. This misconception can lead to unforeseen expenses and frustrations later on. In reality, mortgage valuations are designed primarily to protect the lender, not the buyer. Their purpose is to confirm that the property’s value is sufficient to secure the loan, not to examine the home’s overall condition or any hidden issues it may have.

Even when conducted in person, a mortgage valuation typically involves a very limited inspection, focusing solely on the property’s market value. In recent years, many lenders have moved from in-person inspections to Automated Valuation Models (AVMs). AVMs use algorithms and data analysis to estimate the property’s market value without a physical visit. Although AVMs are fast and cost-effective, they overlook unique property characteristics and potential issues that could impact the property’s suitability as a long-term investment. As a result, regardless of whether the mortgage valuation is performed by an AVM or in person, it is not a substitute for a thorough property survey, and relying on it alone could result in significant repair costs down the road.

Given these limitations, it’s more important than ever for buyers to arrange an independent property survey alongside the mortgage valuation. A qualified surveyor will conduct a detailed examination, potentially uncovering issues that could affect your decision to purchase or negotiate the price. Considering the substantial financial investment involved in buying a home, taking this additional step is often well worth the relatively small expense of a full survey.

Most Commonly Asked Questions

Q: Do I need both a mortgage valuation and a house survey?

A: Yes. A mortgage valuation is for the lender’s benefit, while a house survey is for your benefit. The valuation confirms the property’s worth, while the survey uncovers potential issues that could affect your enjoyment of the property or cost you money in the future.

Q: Is a mortgage valuation the same as a property valuation?

A: No. While a mortgage valuation is performed to assess the property’s worth for the lender, a more comprehensive property valuation would assess additional aspects, such as future market trends, development potential, and structural integrity, which are typically part of a full house survey.

Q: Can I negotiate the property price after a house survey?

A: Yes. If significant defects are uncovered in the house survey, you may be able to renegotiate the purchase price or ask the seller if they are prepared to make repairs before proceeding with the sale.

Q: How long does a house survey take?

A: The survey itself may take a few hours to a full day, depending on the size of the property and the type of survey. The report typically follows within a few days to a week.

Q: What happens if the mortgage valuation is lower than the offer price?

A: If the mortgage valuation is lower than the price you’ve offered, the lender may reduce the amount they are willing to lend. In this case, you might need to renegotiate with the seller or make up the shortfall yourself.

Conclusion

While both a mortgage valuation and a house survey are vital steps in the home-buying process, they serve different purposes. A mortgage valuation protects the lender, ensuring that the property is worth the loan amount. On the other hand, a house survey conducted by a RICS qualified surveyor, protects you, the buyer, by providing a comprehensive understanding of the property’s condition. Skipping the survey could lead to costly surprises while having both offers peace of mind and the full picture of your investment.

For most homebuyers, opting for a house survey is an invaluable step in securing their financial future, as it provides critical information that a mortgage valuation does not.

To arrange a survey, contact a member of our team using the button below.