WHAT IS MORTGAGE VALUATION ?
MORTGAGE VALUATION
The set of operations that are conducted during the process of Mortgage in UK are many in numbers and require great attention and precise calculations. The borrower and the lender in the Mortgage process should both have a connection of trust in each other. The value of the property is determined by a lot of checks and balances, only then, the final value can be concluded upon which both the parties would agree. The technical term for this entire process is known as Mortgage Valuation. Let us understand the Mortgage Valuation in this article.
Mortgage Valuation Explained
The overall process of Mortgage so as to how much should he lend as well as other essential terms of the deal are finalized by the Lender. Therefore, we can say that the Mortgage Lender is the sole decision maker in this process.
The Mortgage Lender does an assessment on how much amount should he sanction to a particular piece of property. The lender does all these checks and verification of the property to ensure that the amount of the Mortgage can be covered by the market value of the property. The lending party must ensure that the value of the property must act as security after the Mortgage amount is sanctioned to the borrower.
Usage of Mortgage Valuation
The first and foremost idea behind the Mortgage Valuation is to check that the value of the property secures the value of the mortgage sanctioned to the borrower. It also ensures the lender of the correct calculation of the Loan to Value Ratio(LTV). LTV is an important part of the Mortgage process as it is useful in determining the mortgage rates. The Mortgage Valuation is conducted from the side of the lender and not from that of the Mortgage Borrower.
How is Mortgage Valuation done?
The process of Mortgage Valuation is done by qualified surveyors or can use the modern AVM- Automated Valuation Model. Once the lender gets to know the Mortgage Valuation, then it is easier to decide if the property is suitable according to the loan which is asked by the borrower.
The lender may ask you (borrower) to provide some of the documents to carry out the Mortgage Valuation. Some of the common paperwork include Structural Defects Warranty (SDW), andExternal Wall SystemForm (EWS1).
Structural Defects Warranty (SDW) is required in case the property is older than 10 years or has undergone changes like renovation or conversion. The repair and reconstruction work is then covered under the Mortgage deal. The process of the External Wall System (EWS) form is completed by the Mortgage Surveyor. It includes the safety assessment of the property including the fire safety norms as per the Government guidelines. Thus, Mortgage Valuation is known to be a very complex affair and it is recommended to always reach out to a Mortgage Expert for guidance.
