Glossary

Mortgage valuation

A mortgage valuation is the lender's check that a home is worth enough to lend against. It is for the lender's benefit and is not a survey.

A mortgage valuation is a check carried out for a lender before it agrees a mortgage. Its purpose is to confirm that the home is suitable security and worth at least the amount being lent.

The valuation protects the lender, not the buyer. It is not a survey of the home's condition, and the buyer may not see the full report.

How it is carried out

The lender instructs a valuer. Some valuations involve a short visit to the property. Others are done from the valuer's desk, and some lenders use automated valuation models that work from sales data.

The valuer looks at the home's type, size, location and general condition, and at what similar homes nearby have sold for. These recent nearby sales are known as comparables.

When the valuation comes in low

Sometimes the valuation is lower than the price the buyer has agreed. This is often called a down valuation. The lender then bases its loan on the lower figure.

For example, if a buyer agrees £300,000 and the lender values the home at £285,000, the buyer may need to find the £15,000 gap, ask the seller to reduce the price, or look for another lender. The example figures are illustrative only.

Valuation, survey and sold prices

A mortgage valuation is different from a home survey. A survey looks at the condition of the home in detail for the buyer. A valuation gives a figure for the lender.

It is also different from an estate agent's market appraisal, which suggests an asking price for selling. Sold prices show what homes have actually sold for, which is the evidence that valuers and agents both rely on. Our guide on how to estimate your home's value from sold prices shows how to read that evidence yourself.

Related terms

Home survey · Comparables · Market appraisal · Asking price · Conveyancing

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