A mortgage application is a long process and can be declined at any stage before it’s confirmed.
Mortgage declined after valuation are also not uncommon. Lenders will usually hire a surveyor to conduct a valuation survey of the house.
This is done to ensure that your property is worth the price and if there are any concerning issues.
If the lender perceives any of the facts in the valuation report as a red flag, your application might be declined.
If this is precisely what you’re going through, don’t worry! Just go through our guide to understand what to do next.
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Mortgage Declined After Valuation: What To Do Next?
Whenever a mortgage application is declined, the common reaction is to immediately make another application, usually with a different lender. But we recommend you refrain from doing so, as this can do more harm than good.
Since the lender must’ve spotted some problem in your valuation report, the same situation might cause rejection again. Repeated rejections in a short span of time will impact your credit history negatively.
The best step is to understand why your original application was rejected in the first place.
To do this, you can ask your lender to explain the reason for rejection, but they might only sometimes comply with this request. In case they don’t, you must study the valuation report carefully and determine why.
Some people opt to hire a mortgage broker with experience in mortgages declined after valuation to help them in this step.
An experienced broker who knows where to look can help you understand the reasons for rejection and suggest remedies to get your application back on track.
Reasons For A Mortgage Declined After Valuation
There can be multiple reasons why a mortgage application is declined after valuation. The following sections examine some of the most common ones.
1. Valuation Mismatch
The valuation report might reveal a down valuation, which means that your property isn’t worth as much as you are paying for it.
In these cases, the lender might want to reduce the amount they’re willing to let you borrow or might back out of the agreement entirely.
In case of a down valuation, you might need to put down extra deposits, or appeal against the survey.
2. Problems With The Property
The valuation report might reveal some problems with the property, such as structural problems, dampness issues and even the presence of asbestos or knotweed on the premises. Any of these might cause the lender to back out.
3. Property Constructed With Non-standard Materials
If the property isn’t made from brick and mortar but uses non-traditional materials for construction, lenders might not be willing to loan you money to buy it. e
Some forms of non-standard construction that lenders might not accept are:
- Steel frames
- Thatched roofs
- Timber frames
- Single brick houses
- Concrete
If your mortgage was declined due to non-standard construction, you can approach your broker to help you connect with lenders specialising in non-standard construction mortgages.
Mortgage Declined After Payment Of Valuation Fees
The mortgage can be declined even after you’ve paid the valuation fee, and you could lose the fee if your mortgage is rejected at this stage.
The best way to prevent this is to work with a mortgage broker from the very beginning so that they can help you get approved in one go.
Suppose your mortgage is declined even after paying the valuation fee. In that case, the broker might be able to appeal against the valuation report or even negotiate with the lender to get a refund. They may also connect you with another lender offering a better deal.
Frequently Asked Questions (FAQs)
1. Can my application be rejected in the case of an overvaluation?
Usually, if the survey report comes in at over value, your application should not be rejected. The lender should be willing to offer you the amount you’ve requested, and you don’t even need to inform the seller that the property is worth more than they’ve accepted.
2. What are the usual fees for a mortgage valuation survey?
The exact cost will differ depending on the property value and the type of valuation carried out. It can be anything between £100 and £1,500.
3. Why is the lender asking me to get additional reports on the valuation?
If the surveyor identifies certain risks with the property that aren’t covered in the scope of the investigation, they might ask for additional reports.
For instance, in the case of damp detection, the lender might ask you to get a damp and timber report. It’s recommended to comply with these requirements to avoid future approval problems.
All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.
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