What happens during a mortgage valuation?

Posted by Simon Banks, December 14, 2021

What happens during a mortgage valuation?

What happens during a mortgage valuation?

The valuation is arguably the most important part of getting a mortgage. It confirms if the house you’re buying (or own if you’re remortgaging) is worth the amount stated. Once the valuation is complete, it’s just a matter of time until you receive an offer – assuming all goes well. But what actually happens during the mortgage valuation? Here, we’ve got the lowdown on what you can expect, including valuable insight from a team member who leads on completions. 

Here’s what happens during a mortgage valuation

Surveyor values the property

A mortgage valuation involves the lender determining if the property is worth what you’re paying for it. To illustrate, if you’re buying a home for £300,000, the lender needs to validate its worth before deciding to offer you a mortgage. Typically, this is done through a surveyor, who visits the property and conducts a valuation. 

What do they look for during the valuation?

Mortgage valuations aren’t as in-depth as full house surveys and usually take between 15-30 minutes to complete. During the valuation, the surveyor will: 

  • Look for obvious defects that could have an impact on the home’s value
  • Confirm key details of the property for the lender, such as the number of bedrooms
  • Assess the market value by looking at recent sales transactions and rental figures on similar properties in the area
  • They may also provide the mortgage lender with a figure for minimum reinstatements, the estimated cost of rebuilding the property from scratch.

Physical or online?

Traditionally, all mortgage valuations took place in person, with a survivor visiting the property. Since the pandemic, however, there have been some online valuations performed. Also referred to as an Automated Valuation Model (AVM), this is where the lender uses data available to find out information about the property without the need for a physical visit. 

Even as normality resumes, many lenders have kept with the AVM model as it saves time and can speed up the mortgage lending process. It’s not uncommon for lenders to now use the data available online to decide the property’s value and the risk of lending on it. 

How much does an AVM cost?

While physical valuations can often cost anywhere between £189 and £2,500, online ones are free. There’s no cost involved in performing an automated valuation model, and you won’t need to pay anything extra. 

How long does it take?

An AVM is much quicker than a physical one as it doesn’t require a surveyor to visit the property. That means there’s no scheduling involved, and the lender can automate the process during the application process. On average, you can expect an AVM to take between 30 minutes and an hour. Of course, you need to factor in the lender digesting the information and making a decision, so you may need to hang tight for a couple of days before receiving a response.

Mortgage valuations with Molo

Kris Byers is the Case Management, Completions and Financial Crime Lead at Molo. He handles many aspects of the mortgage valuation process and other factors related to lending. We caught up with him to find out a bit more about how mortgage valuations work here at Molo. Here’s what he had to say.

1) How do mortgage valuations work at Molo?

As a digital mortgage lender, Molo leverages technology to speed up the application process whenever possible. While completing your mortgage application, Molo conducts an automated, digital valuation on the property. If there is enough online data to be confident the property is suitable, we won’t need someone to visit the property. 
 

2) When does the mortgage valuation happen within the application process, and how long does it take?

If we can’t verify the property automatically, then we’ll send you an email once an underwriter has reviewed your application for the first time. You’ll need to pay a fee and confirm access details so that a qualified surveyor can call the right person to book a date. Once we receive the access details and payment from you, it usually takes about a week to book and complete the survey. 

3) How is the customer experience with Molo, and how has Molo improved mortgage valuations in the past two years?

We’ll know if we need someone to look at the property by the time you finish your mortgage application with us. Usually, an underwriter reviews your application the following day, so we let you know pretty soon after you submit it.  This year we’ve improved the automated valuation, meaning more properties can be verified automatically, and fewer people need to pay for a physical survey. This means you might get a mortgage offer faster than a traditional lender that relies solely on physical survey.

Final words: understanding your mortgage valuation

With an AVM, you can get a decision faster and potentially access the money needed for your next property sooner. But even when more details are required, a physical valuation can step in to determine the property’s value. Understanding how a mortgage valuation works will give you more transparency over the process and hopefully lead to a smoother mortgage application.

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