Understanding the difference between a lender mortgage valuation and a Level 2 or 3 survey
When purchasing a property, understanding the types of assessment available is crucial to making an informed decision. Many buyers are familiar with the lender's mortgage valuation but don't fully understand how it differs from more detailed home surveys, like Level 2 or Level 3 surveys. This article explains the differences, the process behind each type, and why investing in a thorough survey is often well worth the money.
Lender mortgage valuation
A lender mortgage valuation is a brief assessment carried out to confirm that the property is worth what's being lent against it. This valuation is primarily for the lender's benefit, to mitigate their risk, and isn't intended to inform the buyer about the property's condition.
It's worth noting that almost 50% of lender mortgage valuations are now conducted remotely. These 'desktop' valuations use technology and property databases to assess value without a physical visit. While this speeds up the process and reduces costs, it also means the valuation may miss specific issues that would only be picked up by a physical inspection.
Relying solely on a lender's valuation can be risky. Since it doesn't provide detailed information on the property's condition, you may be unaware of potential defects that could lead to significant repair costs later. The lender's valuation is not a substitute for a detailed survey, and treating it as one can leave buyers with unwelcome surprises.
Level 2 survey (RICS HomeBuyer Report)
A RICS HomeBuyer Report, also known as a Level 2 survey, offers a far more detailed visual inspection of the property than a lender's valuation. It highlights significant problems using a straightforward 'traffic light' rating system, focusing on urgent or notable defects that could affect the property's value.
A Level 2 survey is suitable for most conventional properties built within the last 80 years or so that are in reasonable condition. It typically covers:
- The general condition of the property
- Visible damp, movement or structural concerns
- Issues with the roof, walls, windows and chimneys
- Major problems likely to affect the property's value
- Risks to the building, the grounds or the occupants
Level 3 survey (RICS Building Survey)
A Level 3 survey, formerly known as a Full Structural Survey, is the most comprehensive option available. It's particularly suited to older properties, listed buildings, properties with unusual construction, or any home that has had significant alterations or is in poor condition.
A Level 3 survey provides an in-depth analysis of the property's structure and condition, including:
- A detailed inspection of every accessible part of the building
- Identification of defects and their likely causes
- Advice on repairs, including indicative costs and timeframes
- Comments on construction methods and materials used
- Recommendations for further specialist investigations where needed
Which should you choose?
For most buyers of standard, modern homes in reasonable condition, a Level 2 HomeBuyer Report strikes a sensible balance between cost and detail. For older, larger, listed or unusual properties, or anywhere you have specific concerns, a Level 3 Building Survey is the safer choice.
Either way, the cost of a survey is small compared with the cost of inheriting unexpected defects after you've bought the property. We can introduce you to a third-party surveyor for a quote if you'd like one.
Your home may be repossessed if you do not keep up repayments on your mortgage.