You've found your dream home. Your mortgage application is progressing, but then the valuation comes back at less than what you’ve agreed to pay.
This is called a down valuation.
Unfortunately, a down valuation means that you can’t borrow the amount you wanted. You will need to negotiate with your seller, make up the difference, or risk losing that house.
You may also want to take a close look at why the valuer says that the property is worth less than what you've agreed to pay. Has something been flagged that would be expensive for you to remedy?
What is a mortgage valuation?
When you buy a house and need a mortgage, your lender will arrange a mortgage valuation. The valuation confirms that the value of a property aligns with what you're paying for it.
A valuation can also flag any issues with the property which might affect its value as security for the mortgage loan.
What can you do when your property is down-valued?
Challenge the valuation. In theory, you can appeal the valuation. This rarely succeeds, but you can read how to go about this here.
Proceed with a higher Loan-To-Value (LTV). If this is an option for you, your mortgage advisor will walk you through the other products available to you.
Renegotiate and lower your offer. It's often worth approaching the seller with the results of the valuation to see if they're amenable to accepting a lower price.
Up your deposit. Can you afford to put more towards the deposit?
Find another property. Don't be afraid to have a look around for another property.
What if the valuation comes back as zero?
A zero valuation does not mean that the property has no value!
A zero valuation means that a property may not meet the mortgage lender's lending criteria or further information is needed.
It's likely that something about the property needs to be checked before a mortgage valuation figure can be provided.