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Why is Property Valuation Essential in the Mortgage Application Process?

Holo Blog

So you've applied for a mortgage, received your pre-approval, and made an offer? Now the property will be valued. Property valuation entails the assessment of a property's monetary value conducted by trained experts, commonly referred to as valuers. These specialists evaluate various factors such as size, location, and condition of the property. They then compile a comprehensive report detailing the property's market value, accompanied by supportive information explaining their determination.

Here we walk you through the essentials of the valuation process -

  • When seeking to finance a property acquisition through a mortgage in the UAE, obtaining a property valuation is a requirement. When you secure a mortgage from a bank or lender, the property serves as collateral for the loan. Banks initiate a property valuation to ensure that the property's actual value aligns with the borrower's intended payment, which ensures that the property could be sold to recoup the loan amount if the borrower defaults on their payments.
  • The mortgage valuation process takes place after the buyer's pre-approval for a loan and upon the signing of a purchase agreement with the seller, stipulating the purchase price and terms. Using a mortgage broker like Holo can streamline this process and liaise with the banks to organize your valuation promptly.
  • As a part of loan processing, the bank engages a valuation company to conduct the mortgage valuation. Following the valuer's property assessment and the submission of the valuation report, the bank proceeds with mortgage processing and underwriting, leading to the issuance of a final loan offer to the buyer. The ultimate loan amount extended by the bank is determined by either the valuation amount or the purchase price, depending on whichever figure is lower.
  • Before committing to a property and finalizing an agreement with the seller, use a mortgage calculator to estimate your monthly payments and payment schedule. You should also factor in any fees, including the valuation fee, to understand how much you will need up front on top of the down payment, or whether to incorporate fees into your mortgage.

Fees associated with mortgage valuations by UAE banks

Obtaining a mortgage valuation incurs a fee covering the property examination and the corresponding valuation certificate. Just as different banks offer different rates and mortgage products, each bank sets its fee structure, which the buyer is required to pay for the valuation service. Depending on which bank becomes your lender, expect to pay AED 2,500 - 3,000 + VAT.

In some cases, certain banks may reimburse some or all of the mortgage valuation fee once the loan is finalized and the borrower receives the full loan amount. Some banks offer reduced fees or free valuations from time to time, and prices may be subject to change. The costs per bank below are indicative and correct at the time of publishing. Speak with your mortgage advisor to understand what fee your lender is charging at the time of your mortgage application.

Next steps

You now understand the significance of mortgage valuation and have insight into the associated fees imposed by UAE banks. This crucial step in the mortgage application process should be incorporated into your budgeting.

When you use Holo to arrange your mortgage loan, our mortgage experts are on hand to manage all stages of your application including the valuation process.

If you're ready to start your journey to home ownership, use our digital mortgage services and apply online.

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