Home Buyer and House Surveys

It’s your responsibility to check for structural risks and problems when you buy a house or flat. By going ahead without a house survey, you could therefore find yourself with a property that needs extensive repairs or can’t be sold on for anything like the amount you paid for it.

If a survey does reveal the property needs work, you may also be able to negotiate a better price. The same is true if the survey suggests a lower market value than the price you’ve agreed. So, getting a survey can save you money on the purchase, as well as in the future.

The Mortgage Valuation is for the lenders’ benefit and doesn’t provide any details regarding the condition of the property. You may not even get to see a copy of the report.

When you appoint a RICS-regulated surveyor to provide you with a full and thorough survey, you can relax knowing you have a full understanding of the condition of the property before you sign on the dotted line.

Of course, this is completely up to you. Bear in mind that, generally, if you buy a new-build property, you should be provided with a ten-year warranty from the developer. But this may not always be enough to give you the peace of mind you deserve.

New builds shouldn’t have structural problems, as they’ve only recently been constructed. However, it may still be wise to have a house survey to make sure everything is as it should be. This will help you identify and address any issues before you purchase the property and move in.

No, identifying any problems with a property is the buyer’s responsibility. So, you don’t have to get a house survey to sell your property. You may, however, wish to get a survey done to reassure potential buyers. This could be, for example, if it’s a very old property or you’re close to a flood-risk area.

When selling your home, you also have to provide an Energy Performance Certificate (EPC). This rates the energy efficiency of the property with a letter between A and G.

When you book a RICS Level 2 Survey, the surveyor will check all major indoor features, including ceilings, walls, and bathrooms. Exterior features, such as roofing, pipes, gutters, walls, windows, and doors will also be inspected. Problems they will look out for include leaks, subsidence, and rising damp.

You’ll also receive background information on the property and location. What’s more, you can get an estimated rebuild cost you can use for insurance purposes, as well as an assessment of the damp-proofing, drainage, and insulation (but not the drains themselves).

How long a house survey takes usually depends on what level of survey you choose, as well as how large the property is.

Generally speaking, a Level 1 Home Survey will take an hour or so to complete. A Level 2 is likely to take anything between 90 minutes and four hours, as the checks are more extensive and detailed.

As for Level 3 Home Survey, the inspection can last up to eight hours. This is because it is the most in-depth level of survey you can opt for.

Surveyors use a special damp or moisture-meter to check walls for rising damp. They also check for signs of damp such as stains, rotting floorboards, and peeling paint. These can be caused by leaking pipes, accidental floods, or insufficient ventilation.

Yes, both Level 2 and Lever 3 Home Surveys involve window checks, including whether or not the windows are double glazed. Most surveyors will also want to open the windows, so they can check for damaged timber and make sure the keys are not missing.

Yes, surveyors will check the loft because it’s often the easiest place to spot potential problems, such as a leaky roof or insufficient insulation. If you’ve had your loft converted, they’ll also want to check the quality of the work.

If you’re planning to convert the loft space after buying a property, a surveyor can also tell you whether or not this is possible.

The cost of a Level 3 Home Survey depends on the property being surveyed, but prices start at around £600. According to Optimus, a Level 2 Home Survey is generally a cheaper option at around £345 +VAT. However, its cost will also depend on the size and value of the house or flat in question. Either way, you can find a better deal by shopping around.

If you have to pay for your mortgage lender’s valuation survey, the average cost is around £250. A basic Level 1 Home Survey, meanwhile, costs from £300.

Other mortgage types to consider

Other mortgage types you might want to consider if you’re looking to remortgage include:

• Capped-rate mortgage: a capped-rate mortgage is a variable-rate mortgage, but there is a limit to how high the rate can go. This can be useful if you want a variable-rate mortgage, while avoiding unaffordable payments if the rate rises

• Discounted mortgage: a discounted mortgage is another type of variable-rate mortgage. This offers a discounted rate on the lender’s standard variable rate for a certain period of time

• Offset mortgage: an offset mortgage helps to reduce the overall interest you pay by offsetting your savings against the outstanding balance of your mortgage. But this means you won’t be gaining any interest on your savings during the deal

Fixed-rate mortgages have an interest rate that stays the same for a set period. This could be anything from two to ten years. Your repayments are the same every month and you don't need to fear fluctuations in interest rates.

If you choose to leave the deal before the end of the fixed term, most will charge you a penalty. This is known as an (ERC).

Interest rates adjust periodically with a variable-rate mortgage, which means repayments may change throughout the loan term. Usually, the interest rate changes in relation to the Bank of England's base rate. This is very influential on variable interest rates, as is the base rate of each lender.

For standard variable-rate (SVR) mortgages, each lender has a SVR that they can move when they like. In reality, this tends to roughly follow the Bank of England's base rate movements. SVRs can be anything from two to five percentage points above the base rate (or higher). They can also vary massively between lenders.

The other type of variable mortgage is a discount mortgage. Rather than being linked to the Bank of England base rate, discounts are linked to the lender's standard variable rate (SVR). For example, if the SVR is 4.50% with a discount of 1%, the payable mortgage rate is 3.50%. If the SVR rose to 5.50%, the pay rate would rise to 4.50%.

The problem with discounts is that SVR changes are at the lender's discretion. So, your mortgage payments could change even if there has been no alteration in the Bank of England base rate. What's more, even if the SVR changes following a move in the base rate, there is no guarantee that it will increase or decrease by the same amount.

As a result, trackers are usually seen as more transparent than discounted deals. They are also often seen as being fairer for the borrower.

For example, when the base rate fell from 5.00% to 0.50% between October 2008 and March 2009, Lloyds TSB was the only top-20 lender to reduce its SVR by the full 4.50%. All the others cut their rates by less.

When the Bank of England raised the base rate from 0.25% to 0.5% in November 2017, anyone who wasn’t on a fixed-rate mortgage was at risk of seeing their repayments increase. A number of leading mortgage lenders followed and increased their tracker and/or SVR rates a month later.

Most mortgage deals carry arrangement fees, which can vary from a few hundred pounds up to a couple of thousand.

Also, bear in mind that these set-up costs can sometimes be made up of two fees. An increasing number of lenders charge a non-refundable booking fee, which is effectively a product reservation fee. If your house purchase falls through and you don’t end up taking the mortgage deal, you won’t get this fee back.

The second type of fee is an arrangement fee, which you pay on completion of the mortgage. Therefore, you won't have to pay it if, for any reason, you don't take the mortgage.

Calculate how early you could pay off your mortgage. But make sure you read our mortgage overpayment guide first, as overpaying isn’t the right move for all homeowners.

Mortgage overpayment calculator

Remember to always factor these into the overall cost of any deal. Even if a lender is offering a seemingly unbeatable rate, steep fees could mean that it actually works out to be more cost-effective to opt for a higher rate. In fact, this may come with a much lower fee or no fee at all.

The best mortgage rate for you depends on how much you are looking to borrow. If you’re applying for a large mortgage, a high fee is often worth paying in order to secure a low interest rate. But those with smaller mortgages could be better off opting for a higher rate and lower fee.

However, while this is the general rule, it is well worth crunching the numbers when you’re comparing mortgages. You need to work out the total cost over the term of the deal. For example, if you are going for a two-year fix, you need to work out the cost of your repayments over the term. You can do this by finding out what the monthly payment will be using our mortgage calculator and then multiply by 24. You then need to add on the arrangement fee to find out the total cost.

You will likely find that you have more mortgage deals available to choose from if you have a good credit history. So, it’s worth making sure that your credit report is as good as it can be before applying for a mortgage.

Steps like paying off any outstanding borrowed credit you owe, as well as ensuring your current address is on the electoral roll, can help to improve your credit score.

The more money you can save as a deposit, the less you’ll need to borrow as a mortgage loan. What’s more, having a bigger deposit can help you get access to more competitive mortgage rates.

Lenders will often have a maximum ratio they’re prepared to offer you. Instead, the rest will need to be made up with either a deposit or an equity loan like the government's Help to Buy equity loan scheme.

Using a mortgage comparison tool can help to give you a better idea of how much you’d need to pay in monthly costs and interest. It provides information on the duration of the deal, the maximum loan-to-value ratio. It also tells you about product fees you may need to pay for the mortgage deals available based on your borrowing requirements.

It’s important to remember, though, that the actual mortgage deals you’re offered when you go to make an application may differ. This is because they will then be influenced by your financial situation and credit history.

Get free mortgage advice and see deals from the whole of the market with broker London & Country. Call free from your landline or mobile on 0800 170 1943 any day.

Read more about London & Country

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