Valuation Report for Bridging Loans

Wednesday 4th January 2023 | 3 minute read

A valuation report is the document provided to a lender by a RICS qualified surveyor or appraiser, assessing the estimated market value of the property, including factors like construction method, condition, location, and recent comparable sales.

Surveyor stood in front of a house

Some lenders will also accept automated valuations as an alternative to assist in fast bridging loan completion times, however this is typically only available for the most common types of property such as prime location residential properties.

A Valuation Report (or “VR”) is an appraisal of the value of a borrower’s property used for a bridging loan application. The Valuation Report is a key element of the bridging loan process and it is used to provide lenders with a reliable estimate of the worth of the security being offered for a loan. A Valuation Report also helps assess the risk associated with the security of the loan.

In this guide, we'll discuss the key elements of a Valuation Report in the context of bridging loans, including the components, the factors assessed, and the importance of the report.

Key Components of a Valuation Report

A Valuation Report is essentially broken down into three main parts: the property appraisal and a statement of opinion.

The Property Appraisal

The property appraisal part of the Valuation Report is the main focus, as it describes the security on offer against the loan. This section will typically evaluate the subject property through a physical inspection of the premises, its construction, internal features, and the external features and amenities of the surrounding area. 

The Statement of Opinion

The statement of opinion is the final part of the Valuation Report, and is a summary of the overall opinion formed by the surveyor. This will include their overall opinion of the value of the security offered, as well as any additional factors that should be taken into consideration when assessing the security of the loan.

Factors Assessed

The Valuation Report will assess a broad range of factors when forming a valuation.

The key factors typically assessed include: 

  • Location: The area that the property is situated in, as well as the local amenities available are important factors which can influence the value of a property. 
  • Construction: The type of construction used for the property, the materials used and any of characteristics such as whether concrete has been used for load bearing supports, the roof type, whether its been extended or modified.
  • Internal and External Condition: The condition of the interior and exterior of the property can have an impact on its value, particularly if there is evidence of any damage or disrepair.
  • Nearby Developments: Recent and upcoming developments in the vicinity can also influence the value of a home, as can the number of homes in the area.
  • Current Market Value: The current market value of properties is probably the most important factor for determining a property’s value. This takes into account all of the above factors to estimate the current value of the property.

Importance of the Report

The Valuation Report is an important element of the bridging loan process and helps to inform the lenders' decision as to whether or not they will provide a bridging loan and the maximum bridging loan amount they will offer.

A Valuation Report provides a reliable estimate of the value of the property, which the lender will use to assess the level of risk associated with the loan. without the Valuation Report, they could be taking a risk that is too large for them to bear.

Final thoughts

A Valuation Report is an essential part of the bridging loan application process, providing lenders with an accurate estimate of the value of a borrower’s security.

This report is composed of three key elements - the property appraisal and a statement of opinion from the surveyor. The factors assessed in the report include the location of the property, the condition of the interior and exterior, nearby developments, and the current market value of the property.

This report helps lenders to assess the level of risk associated with the loan, and it is important for borrowers to provide accurate and up to date information for the report.

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