Mortgage-why do banks want a structural report?

Salthillprom

Just wondering why exactly the bank needs a structural report when approving a mortgage? I’ve a number of queries if someone would be so good as to answer them for me please? Thanks

Is it because the bank wants to ensure the asset is not structurally defective and therefore a depreciating asset?

If an auctioneer provides a valuation report, then the asset is valued already, so why is a structural report needed?

If a structural report is submitted to the bank showing that there’s an issue with the house, what does the bank do then? Do they give the mortgage on the basis that they know from the structural report that work has to be done to the house and force the new owner to do the work? Or do they refuse the mortgage because the house is defective on foot of the structural report? Or something else?

I presume if the structural report comes back that house is ok, then there’s no issue?

If report says house isn’t, then does bank send out their own engineer to assess the defects before approving mortgage?

Thanks

phormium

I have only seen banks require a structural report in circumstances where either the property is very old/in bad repair or the valuer has commented on some aspect of the property in his/her valuation and recommends a structural report.

The bank wants in theory to be able to repossess a saleable house should they need to, if there is something wrong with it that needs doing such as new roof/rewiring or a big crack up the wall that needs investigating as to whether it if serious or not then they will want to know about it and the plan to rectify it.

If the work is crucial then they may still approve the mortgage but with a condition that the work must be done and they will probably hold back a retention of portion of the mortgage until completed.

Alternatively they may turn it down altogether if the structural report is too bad and say for example the applicant would not have sufficient funds to do the work needed.

They won't be sending out their own engineer to check, they send a valuer only, you must pay for the engineers report and they are not going to get another engineer themselves and pay for it to double check your engineer's report.

coylemj

Salthillprom wrote: »

If an auctioneer provides a valuation report, then the asset is valued already, so why is a structural report needed?

Because a valuer has zero qualifications when it comes to surveying the house for structural defects. But as Phorium says (twice) above, the valuer may have spotted something that the prospective lender needs to know. This might include things like chronically bad wiring, windows in a bad state etc.

All the valuer does is take the average recent selling prices in the area for a house of that size and make some crude adjustments based on pluses and minuses like a nice conservatory (+) no central heating (-), tired old 1970s kitchen (-) and so on.

The valuer's primary function is to come up with a number.

phormium

Don't know why it posted twice

Salthillprom

Thank you both!