Mortgage Broker

This post discusses the various types of surveys available to home buyers available at http://www.mortgagebrokeradvice.co.uk/

WHAT IS A MORTGAGE VALUATION ?

A mortgage valuation ( or sometimes known as a valuation report )  is not a survey as such – lenders want to know how much the property is worth and to be notified of the property’s present condition.

Lenders will either use their own valuers or a valuer from their chosen panel to do a valuation report – with the valuer making comment to any repairs / reports required ie, structural report, timber and damp, electrical etc.

Unless the lender is offering a free valuation you will have to pay for the cost of this basic report on application of the mortgage.

If any further reports are required such as Timber and damp these usually have to be arranged and paid for by the purchaser unless the vendor of the property is prepared to pay / go halves on these costs.

WHAT IS A HOMEBUYERS REPORT ?

A Homebuyers report is a more detailed survey than the mortgage valuation / report.

It will advise on any major problems such as subsidence, and obvious rot etc.

However the surveyor will not lift up floor boards or drill any holes but provides a more in-depth report than a valuation report – it also costs more.

Again any defects will require more detailed reports as mentioned above.

WHAT IS A BUILDING SURVEY ?

These cost the most but are a more comprehensive detailed report and are usually for very old, timber framed, unusual , listed or thatched properties with the surveyor going in the attic, checking behind walls and looking between floors and ceilings.

They will usually contain estimates and costs and advice for any defects found.

WHAT TYPE OF VALUATION SHOULD I HAVE ?

As everyone has different levels of experience within the house buying process speak to your mortgage broker who will be able to advise you on what report / survey in your particular circumstances should undertaken bearing in mind the condition and age of the proposed property to be purchased. 
 
WHAT IF LENDER WILL NOT LEND THE FULL AMOUNT REQUESTED ?

If after having one of the above reports / surveys done and repairs / work has to be done to the property the lender will require written estimates for the full cost of said repairs – in certain cases the lender will then place what is called a RENTENTION on the mortgage.

For example if you are buying a property for £ 125,000 and require a mortgage of £ 110,000 with you putting in a deposit of £ 15,000 and repair costs are £ 5,000 the lender will reduce your mortgage to £ 105,000 meaning on completion you will have to increase your deposit to £ 20,000.

The lender will then normally give you up to 6 months to have the repairs / works done and will either accept receipts / guarantees provided by the companies who have done the work or send a valuer back to re-inspect your property ( usually for a fee ) and will then increase mortgage back up to £ 110,000 and forward you the £ 5,000 which was previously retained. 
 
Please ensure you fully discuss your valuation / survey requirements with your mortgage broker prior to submitting a full mortgage application to the lender.

1. DEPOSIT

A deposit for the property this can be as little as 5% but the bigger the deposit the better the rate, and proof that you can afford the mortgage over the selected term.

The deposit can come from various sources IE savings, Gift from Close relatives (Parents/Grand Parents) or in some case equity within the property ( you would need to seek advice before committing to purchase the property).

2. INCOME

Lender will want you to be able to prove that you can afford the mortgage in every case and they do that by looking at your income whether you are employed or self employed.

They will then look at what credit commitments you have already and will usually deduct these from your income to establish affordability.

It is vitally important that when you apply for a mortgage that you can prove your income.

Typically what lenders will look for is the following:

• Proof of Identification typically Passport or Driving Licence
• Proof of residency of current address
• Last three years address history
• Payslips (usually last three if paid monthly but could be more dependent on how you are paid)
• If Self Employed SA 302’s and Tax overviews (These can be obtained by you accountant or directly from HMRC).
• Bank statements
• Mortgage Statement if already a homeowner.
• Details of existing credit commitments (which could include credit card statements, Loan Agreements)
• Or any other document that they feel is necessary.

Therefore it is vitally important that when applying for a mortgage or any other loan for that matter you are able to prove you are the person(s) applying and that you can afford the loan.

You will need to be able to provide to the Bank,Building Society or Specialist lender the original documents.

If using a broker you can usually provide the original documents to them and they will forward certified copies to the lender.

Record keeping is essential and throwing away important documents could result in a long delay in applying for a mortgage or in some cases refusal.

So if you are at the point of thinking about applying for your first mortgage or are thinking about buying your next property ensure that you have got all the correct documentation as the lenders will want to see them.