Mortgage Declined After Valuation

A property valuation is an important step when it comes to securing a mortgage. Performed by a qualified surveyor, the process involves assessing a property and its current market value. This can seem intimidating, but it's instructed by the lender to ensure there are no significant problems with the property that would make it unsellable, it’s worth at least the minimum amount required to justify the loan requested and its suitable security.

When carrying out a valuation, a professional surveyor will typically take into account factors such as building condition, size and accessibility, location and current market value. Although a lender may use this information for risk management purposes, they'll also use it to confirm how much they’re going to lend.

Some surveyors may physically visit the property, while others may carry out desktop – i.e. computerised – valuation. Desktop valuations are more commonly performed during the remortgage process.

The purpose of a mortgage valuation is to provide the lender with an accurate picture of the value of the property they're lending against. This helps them assess the risk associated with providing a loan, as it allows them to verify that the amount being borrowed does not exceed what the property's worth.

It also provides insight into any potential issues that could affect the property and make it unsellable or unliveable – such as there being no working bathroom or kitchen. This helps to protect the lender from future losses should you default on your loan, as they would need to sell the property.

Property valuations offer buyers peace of mind too, as it provides them with the assurance that their purchase price is reflective of its market value.

Yes, unfortunately, it's possible for a mortgage to be declined after valuation. This means the lender has determined that there are risks associated with offering you the loan and they're unwilling to proceed with your application at this time. While it can be disheartening to be declined after a valuation, it's important to understand that it doesn't necessarily mean you can't get a mortgage at all. Depending on the reasons behind the rejection, there may be ways to remedy the situation and reapply for a loan.

Bear in mind that instead of outright declining a mortgage application after valuation, some lenders may simply offer you a smaller loan. This may happen if the property is worth slightly less than originally quoted to the lender. If this happens you may need to consider negotiating with the seller or putting forward slightly more in deposit.

There are a few potential and common reasons why a mortgage may be declined at valuation.

The Market Value of the Property Is Below the Purchase Price

A lower valuation can often be a deal-breaker for lenders, which could cause them to reduce or withdraw the amount they're willing to lend you. If your property's value is lower than expected, there are still ways of securing a loan. You and your broker can explore strategies such as: increasing your deposit, renegotiating with the seller, appealing against the survey results, etc.

There Are Problems with the Property

Surveys can bring up issues with the property you're purchasing, which may lead to a lender rejecting your loan application. Some issues that could trigger an immediate rejection of your mortgage include cladding, damp, asbestos, Japanese Knotweed and structural problems.

While these are only some of the property issues that can be difficult for lenders to overlook, an independent, specialist mortgage broker like John Charcol on your side makes it easier. We can direct you towards a lender with more flexible criteria that may be able to consider the property despite certain potential issues.

The Build Is of Non-Standard Construction

If your property is non-standard or a new build, it can be more difficult to find lenders willing to accept it as security as this can make it more difficult to resell in the event of repossession. Some of the most common features that are considered non-standard and could lead to rejection at valuation include:

• Steel frames
• Thatched roofs
• Timber frames
• High-rise structures
• Prefabricated concrete
• Glass, wooden, concrete, metal or flintstone walls.

When applying for a mortgage, it's important to inform your broker of any non-standard construction as we’ll be able to direct you towards a specialist lender with criteria that enables them to consider the kind of property you’re looking at.

Yes, it's possible for a mortgage application to be rejected after paying the valuation fee, and you might not get your fee back if this happens. The best way to make sure that doesn't happen is to talk to a broker like John Charcol, as we can help you with your application and direct you towards the best lender for your situation and property, increasing your chances of being approved.

Depending on the size of the property, a valuation can cost anything from £150 to £1,500, but some lenders may offer free valuations to applicants.

If the surveyor notices potential risks that they can't investigate, they may advise you to request additional reports. An example of this is if there are signs of damp in a property. The lender would then ask for you to arrange a homebuyer’s report to provide more information on what work might be required in the future and how its neglect could affect the property. In some circumstances the lender may even request that you arrange a structural survey if, for example, there were concerns of rot and the valuer couldn’t determine the level of risk due to a wall being reskimmed.

This often refers to non-standard construction properties, which some lenders might deem too high risk to approve. Often these properties require additional checks or reports due to their unique nature, as they can contain hidden issues that require extra caution. If a lender is unable to confirm the safety and stability of the property, they'll refuse to provide you with a mortgage.

If a property is deemed unsuitable by your lender, it doesn't mean that it's an inherently bad investment – it just means that the lender may see it as a high risk. However, this doesn't mean that you can't secure a mortgage for the property. It just means that additional steps may be required and you may need to find a specialist lender.

At John Charcol, we work with a wide range of lenders that specialise in non-standard construction mortgages, so you can be sure that we'll do our best to find an appropriate lender for your needs.

If you've had a Nationwide mortgage declined after valuation or a Kensington mortgage declined after valuation – or rejection by any high street lender – then we can help secure an alternative solution. We can also help if you have bad credit, have been refused due togambling, or are a "mortgage prisoner". Simply contact us today to discuss your options.