Mortgage Valuation
Mortgage Valuation
What is a Mortgage Valuation?
A REGULATED VALUATION FOR MORTGAGE PURPOSES
The mortgage valuation is an appraisal to establish the value market of properties or rights that the interested party wishes to establish as guarantee for a mortgage loan.
The valuation report must be issued by a valuation company authorised by the Bank of Spain. It must observe the provisions of Spanish Order ECO/805/2003 of 27 March that require, among other things, a series of specific checks at the property. This means that no other appraisal, like for instance online valuations, will be accepted for a mortgage loan.
Article 14 of Spanish Law 5/2019 of 15 March that regulates real-estate credit agreements, generally known as the “Mortgage Law”, establishes the distribution of the mortgage expenses and specifies that the property valuation expenses correspond to the party who applies for a loan.
Who needs it?
IF YOU ARE APPLYING FOR A MORTGAGE LOAN, YOU WILL NEED A MORTGAGE VALUATION.
The mortgage valuation is required when a natural or legal person applies for a loan and the agreement requires a property or right as guarantee within the framework of the current mortgage law.
Except for the assets excluded by Art. 11 of RD 716/2009 of 24 April, all other assets can be used as guarantee for mortgage loans or credits.
Assets excluded:
a) Usufructs.
b) Administrative concessions.
c) Surface rights that are under 20 years from the date foreseen for the final repayment of the mortgage loan or credit, and grazing, water, wood and other similar rights.
d) Properties and facilities located outside the town planning and land on which temporary building work has been authorised, under the terms foreseen for each case in the applicable laws on land and development, when this circumstance has been entered in the registry.
YOU CAN TAKE OUR VALUATION TO MOST BANK ENTITIES.
Universal. We have been authorised to work with most bank entities. You can take our valuation to practically all entities.
Geographical range. We have experts all over Spain and branches for different regions.
Technical scope. We have over 1,100 experts.
Universal. We have been authorised to work with most bank entities. You can take our valuation to practically all entities.
Geographical range. We have experts all over Spain and branches for different regions.
Technical scope. We have over 1,100 experts.
How do we do it?
EXPERIENCE, KNOWLEDGE AND TECHNOLOGY AT YOUR SERVICE
Our Gloval Valuation division is at your disposal for valuations and appraisals with many branches and over 1,100 local experts who master the local real-estate market.
1. Order
Tell us your needs by filling in our form.
We will analyse your order, assign you a technical team and ask you for the documents we need.
2. Then we get started
Our technical team will contact you and arrange a date to visit the property and perform all the checks required by the laws, including registry records, occupancy status, development, cadastre, market and other checks.
3. Your value
Before you receive it, the property appraisal or valuation goes through a calculation process led by experts who specialise in the real-estate market and then a technical validation process run by Gloval to ensure the quality throughout the entire process and give you the best service possible.
4. Delivery
We will then send you the report and will remain at your disposal for any doubts you may have.
Frequently Asked Questions
The Mortgage Valuation, also known as the Official Valuation, can only be performed by a Valuation Company that has been authorised by the Bank of Spain by virtue of Spanish Royal Decree 775/1997 of 30 May that regulates the authorisation of valuation services and companies. The Official Valuation follows the criteria laid down in Order ECO/805/2003 of 27 March that sets forth the rules to value real-estate property and specific rights for certain financial purposes. The Mortgage Valuation is, as its name suggests, the only valuation that may be used to enter into a mortgage loan agreement.
The property appraisal does not always have to follow the Order ECO rules. Depending on the purpose of the appraisal, it will follow one set of rules or another. In general, the purpose of an appraisal is to establish a market value through different appraisal methods.
This Order contains the regulations that apply to Mortgage Valuations. Among other things, they determine the minimum checks required, the valuation methods based on the type of property and the qualifications and warnings that could affect the value and, therefore, the guarantee for a mortgage loan.
It is published in the Spanish Official Gazette with its relevant amendments as Order ECO/805/2003 of 27 March and sets forth the rules to value real-estate property and specific rights for certain financial purposes. Mortgage Valuation.
A Mortgage Valuation will remain valid for 6 months from the date of the Valuation Report. This is regulated in Art. 62, Section 4 of Spanish Order ECO/805/2003 of 27 March.
The documents required are regulated in Art. 8 of Spanish Order ECO/805/2003 of 27 March and will depend on the characteristics and type of property, the occupancy status, its construction status and the valuation method, as well as the rights and restrictions on the property. Some of the documents we may need are:
- Land registry statement issued within the last three months before the valuation date. Title Deed.
- For properties under construction:
- Technical project with seal of approval.
- Building work permit.
- Interim certificate issued by the Site Manager.
- Building contract.
- Quote by contractor.
- For council houses: Rating certificate or document used to determine the Maximum Selling Price or Maximum Rent.
- For new build properties: Proof of the taking out of a ten-year insurance against damages.
- Rented properties:
- Rental or subletting agreement.
- Receipt of last rent paid.
- Properties linked to a business: Properties that can only be used for a specific purpose (hotels, nursing homes, cinemas, hospitals, petrol stations, farms, etc.).
- Income Statement.
- Licences/permits for the business.
- Rural property:
- Cadastre documents.
- Operating accounts.
- Irrigation rights.
- Urban or building land:
- Urban development certificate or Local certificate that specifies its planning information.
- Establishments, offices or warehouses under horizontal division:
- Articles of Association the Home Owners’ Association or a similar document showing usage restrictions.
The qualifications are limitations that are expressed in a valuation report and entail an important risk to the guarantee of the property, which means that it cannot be used as guarantee unless those circumstances disappear. The Company usually includes qualifications when it is unable to perform all the checks required by Order ECO (Art. 10 of Spanish Order ECO/805/2003 of 27 March). Some examples are:
- The surveyor can’t inspect the inside of the entire property.
- The client fails to provide the rental agreements for rented properties.
- The client fails to provide the Building work permit for property under construction or the Project doesn’t have the seal of approval.
- The property can’t be identified by the legal description.
The general warnings point out doubts on some of the data used to calculate the technical values of the property (Art. 11 of Spanish Order ECO/805/2003 of 27 March).
Specific warnings are included when the Company considers that there is a reasoned likelihood of a future drop in the property value (Art. 12 of Spanish Order ECO/805/2003 of 27 March).
The Mortgage Value will not necessarily be the same as the Market Value. A mortgage adjustment may be applied to the Value estimated in the Valuation using the Comparison Method when the circumstances point to a high likelihood of a future drop in the value.
Also, depending on the different methods of valuation used and the type of property, the Mortgage Value will be the lowest of the estimated values.
In accordance with Art. 5 of Spanish Law 41/2007 of 7 December that amends Spanish Law 2/1981 of 25 March regulating the Mortgage Market, bank entities will accept the valuation of a property provided by the client as long as it has been certified by a company authorised by the Bank of Spain and it has not expired. The credit entity may nevertheless run the checks it deems convenient but the client will not be charged for the expenses of these checks.
GLOVAL has been authorised by the Bank of Spain and we work with most bank entities in Spain. Therefore, as a trustworthy provider, our valuations do not require additional checks or controls by the interested entities and this speeds up the process.
They trust us
