Once you have purchased a property and signed the provisional purchase agreement, you can make an appointment for a valuation. A valuation is carried out by a certified valuer and results in a valuation report. This valuation report provides the basis for the valuation. You will often need a valuation when applying for a mortgage from a mortgage lender.
Valuation report for a mortgage
The mortgage lender wants to be sure of the value of the property before approving your mortgage application. Your property serves as collateral for your mortgage. That is why your maximum mortgage is linked to the value of the property. Since 2018, you can only borrow 100% of the property value, no more. The value stated in the valuation report therefore has a direct impact on your loan application.
Valuation and overbidding
In the current housing market, bidding wars are common. People are offering significantly more than the asking price for a property. The asking price is often determined by the estate agent and is based on the value of the property.
When you choose to bid high, it is important to realise that you will have to contribute this money yourself. You are not borrowing it from the bank.
A calculation example:
You have made an offer on a property and it has been accepted. Congratulations! The asking price was €250,000 and you offered €280,000. You then request a valuation for your mortgage application. The report shows a valuation of €250,000.
This means that the bank will give you a mortgage for up to the value of the property, in this case €250,000. You will therefore need to contribute the remaining €30,000 yourself.
Applying for a mortgage?
Would you like more information about applying for a mortgage and what is involved? Read our blog article about the applying for a mortgage or contact one of our advisers for a free consultation.