Mandatory valuation before a mortgage loan is granted

The new year marks a major change in the property world: from now on,  banks will be required to have a property valued before granting a mortgage loan. The amount lent to the customer will now be determined on the basis of the valuation figure rather than the purchase price.

This measure follows the European Banking Authority’s decision to require every banking institution to ensure that an accurate valuation of the property for sale is carried out when a mortgage loan is granted, so that the property’s price is as close as possible to its actual value. The aim is to prevent amounts being lent that are disproportionate to a property’s true value.

The aim is to prevent excessive prices and bidding wars over properties, as buyers who pay more than a property’s actual value will have to provide a larger personal contribution. Indeed, if the mandatory valuation produces a figure below the purchase price, the buyer will need to contribute more of their own funds to complete the transaction.

Since the beginning of the month, banks have therefore been required to calculate the loan amount on the basis of an objective valuation.