One of the topics covered during your CeMAP study is the application process. Having interviewed your customers, assessed their needs, conducted a full affordability assessment to establish how much they can borrow, and worked out what the monthly repayments would be on various rates, the full application process can begin.
Once they have found a property and had an offer accepted, they will apply for the mortgage with you, their mortgage advisor. Proof of income and property details are amongst the information that needs to be established.
One of the decisions that the customer needs to make is whether or not to opt for the standard mortgage valuation report, or a more detailed homebuyer’s report or full structural survey. What they choose may be determined by the age of the property, or simply personal preference for peace of mind. Let’s have a look at the options in more detail:
Standard mortgage valuation
These reports are a requirement of all mortgage providers prior to a mortgage offer being produced. They are not as detailed as the other types available, and are more a quick assessment of the property to ensure that it is suitable security for the mortgage company, and that there are no major works that need to be carried out which may affect the stated value of the property.
The mortgage provider will normally have a trusted panel of surveyors. There is a fee for a valuation report, normally dependant on the purchase price. Some lenders offer fee-free products, meaning that you would not actually pay for the report (though this normally results in a slightly higher mortgage rate).
Homebuyer’s report and full structural survey
Both of these go into much greater detail, and as a result cost a lot more to conduct.
A homebuyer’s report will highlight major issues that need to be addressed, such as subsidence or rot. It will contain a valuation figure (which is the valuer’s opinion of what they feel property is worth), along with reinstatement value. This is used for insurance purposes, and is the figure to rebuild the property should it ever be knocked down or destroyed for whatever reason. The surveyor is limited in that they do not lift furniture or floorboards, and no holes are drilled.
A building survey is a lot more detailed and again a lot more costly. It is an extensive survey, during which the surveyor will check in the attic and behind walls, and then provide advice on how best to fix any issue, with an idea of the time and money that would need to be allocated to it. Following the completion of the survey, a full and detailed report is drawn up for the customer to look over.
As well as advising on what you can do to improve, it also contains the ‘what ifs’ – for example, what if you didn’t carry out the remedial repairs recommended? Each one has positives; it is really down to the customer to select the option most appropriate to their circumstances, and it will be your job as the mortgage advisor to support them through their decisions.