SECURED LENDING VALUATION- ALL YOU NEED TO KNOW

A valuation for secured lending may not be the same as one made for financial reporting purposes. This is true although similar base such as market value may be applicable.The assumptions under which the valuation is made in this case are different from that of financial reporting.

Whether you are securing a business loan against the value of a commercial or other premises or seeking finance to undertake a development project, a lender will require a valuation to ensure that the property they are lending against provides good security.

The purpose of having a loan valuation completed is to establish whether the amount of the loan can be secured against the value of the property and, should you default on the loan, whether the lender can realistically recoup the amount.

Lenders (banks and other financial institutions) need to know loans taken out on property (resdential, commercial or mixed use) is suitable and that the risk is properly managed. They need to make an informed decision on whether any loan they make is secure. Getting this right is therefore vital.

Obtaining a valuation by an experienced professional is essential. Reputable banks and other lenders will only consider a valuation report prepared by a Chartered Surveyor and Registered Valuer in accordance with the Royal Institution of Chartered Surveyors’ (RICS) Red Book.

When providing a secured lending valuation we seek to provide an objective and balanced assessment of a property’s suitability for loan security. All valuations for secured lending are undertaken in accordance with the RICS Valuation Professional Standards incorporating the International Valuation Standards (The Red Book). We assess the financial risk of a proposed property purchase or its current LTV ratio; essentially aimed at striking the right balance between the exposure to risk and the business opportunity created in granting a loan.

KEY POINTS:

• The valuation is produced by a Chartered Surveyor and Registered Valuer.
• The property is inspected (location, size, condition and quality), measured and photographed.
• Detailed research on comparable evidence (other properties of similar size, age and location) is undertaken using our comprehensive databases, historic data sources and tools to establish a valuation.
• A detailed written RICS Redbook Valuation report is provided and derived from robust RICS standards and regulatory processes.
• Post valuation support is provided by phone and email.