What To Do If Your Mortgage Has Been Declined After a Valuation Survey

When you apply for a mortgage, the lender will conduct a valuation to check that the property you’re buying is worth enough to secure the requested loan.

In the valuation report, the lender commissions may also show severe defects that might be spotted during the valuation, such as major roof repairs or dampness.

As a result, this can sometimes lead to your application being declined.

It’s always disappointing if your mortgage is declined after a survey or valuation, but it can just be a minor setback on the journey to buying your future home.

Why was your mortgage declined after the survey?

There are three main reasons why a lender might refuse your mortgage after conducting a valuation or survey.

1. Their valuation is less than you’ve agreed to pay

When a lender carries out a valuation on your property, they may feel that it’s worth less than you’ve offered for it.

This is called a ‘down-valuation’.

In some cases, this will lead them to reject your application as the amount they are willing to lend is much lower than you require. In others, they might agree to lend you a reduced amount.

For example, if you’ve had an offer accepted at £250,000 and requested a 90% mortgage, but the lender values the property at £240,000, they usually won’t lend you more than 90% of that valuation.

This would be £216,000, while you’d need £225,000.

In this case, you have several options.

You can:

• Renegotiate with the seller to bring down the price
• Make up the difference by putting down a bigger deposit
• Appeal the decision with your lender
• Start a new application with a different lender

Before you do anything, it’s wise to speak to a broker first.

They can advise you on your chances of success by appealing the decision or applying to another lender. They’ll also help to ensure you get the best possible deal on your mortgage.

2. The property has structural issues

Certain structural issues will trigger an automatic rejection from some mortgage lenders, including:

• Asbestos
• Unsafe cladding
• Japanese knotweed

If this happens, you’ll either need to repair the issue or try to find a mortgage with a different lender.

Working with the right broker can help you find the right lender. They will know which lenders are the most and least strict about structural issues highlighted during a valuation and can help you apply to one with a better chance of success.

3. The property has unusual features

Some lenders are more cautious than others about the types of properties they will approve a mortgage for.

These lenders tend to avoid homes with ‘non-standard construction’. That is, anything other than a typical brick-and-mortar property.

This is because less common building materials, such as concrete or wood, are more prone to damage and weathering and are therefore classed as higher-risk.

Some examples of properties with non-standard construction are:

• High-rise flats
• Listed buildings
• Prefab homes
• Thatched cottages
• Steel or timber frame homes

In some cases, the feature that caused a mortgage rejection could be the same feature that made you fall in love with the property. It doesn’t make it impossible to get a mortgage, but you’ll need to find the right lender.

What can you do if your mortgage is declined after a valuation?

Whatever the reason behind your rejection, you will always have options.

Before you proceed, take your time and follow our three steps to success:

1. Find out why you’re application was declined

Before you even think about reapplying for a new mortgage, you need to find out why you’ve been rejected for the first one. To do this, you’ll need to speak with your lender.

Did they discover a structural issue? If so, how bad is it? Or was it simply due to the property type falling outside your existing lender’s eligibility criteria?

Whatever the reason, you will likely be declined again if you don’t address the root of why this happened.

2. Speak to an experienced mortgage broker

If you suspect your mortgage was declined based on non-standard construction or a structural issue, speaking with a broker who has experience getting mortgages for people in similar circumstances could make all the difference when you reapply.

If you get in touch we can match you with an advisor we work with who specialises in situations exactly like this.

They’ll be able to help you pinpoint the reason for refusal and explore your options from here.

3. Prepare to reapply

Once you’ve found out why your first application was declined and you’ve spoken to a broker, you’ll be ready to take the next steps with their support.

This could simply mean re-negotiating a new price with a seller or more lending with your existing provider.

If you need a new lender, you’ll be much better prepared for this application with the knowledge and expertise to help boost your chances of success.

Will you lose your valuation fee if the mortgage is declined?

Yes, you will. Whether your mortgage is approved or declined, a professional surveyor has carried out the valuation, and the fee covers the charge for this service.

There are some circumstances where you can challenge the surveyor’s valuation. If you’re successful and your mortgage is approved, you’ll avoid paying out again for any further mortgage surveys.

If this isn’t an option or you’re unsuccessful, it’s essential to choose your next lender carefully, one who tends to view these types of situations more favourably.

Get matched with an experienced mortgage broker

It’s never good news when your mortgage is declined following a valuation, but as you can see, there are still a number of strong options available to you, and the route to your next home doesn’t have to be permanently blocked as a result.

This is where we can help! Using our unique broker-matching service, we will match you with someone who has the right knowledge and expertise to handle your situation.

To start the process, make an enquiry or give us a call on 0330 822 0505.