Buying with a Mortgage? New valuation rules for mortgage drawdown

Last year the law in relation to valuations for mortgages was altered and the changes can have a big impact on mortgage drawdown.  It has always been the case that a Borrower has to obtain a Bank approved valuation before funds will be released.  The reason for this is straightforward - to ensure that the property is worth in excess of the amount being borrowed.  Under the new rules however, the valuation has a ‘shelf life’ of two months.  Simply put, if the loan is not drawn down within two months of the date of the valuation, then a new valuation must be obtained.  Funds will not issue from the Bank until an up to date valuation is provided.  If there has been a reduction in the market value of the property this could result in the Bank refusing to issue funds at all with the knock on effect of the Borrower not being able to purchase the property.  Borrowers will need to bear this in mind when purchasing a property with a mortgage and will need to coordinate the valuation with the purchase process as much as possible.  Borrowers’ solicitors will be able to assist by ensuring that adequate protection for the Borrower is included in the contract to deal with a situation where a satisfactory valuation cannot be obtained.

The new rules are contained in SI 47/2015 - Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Housing Loan Requirements) Regulations 2015.

If you have any queries in relation to purchasing with a mortgage please contact a member of our Property Team on info@joyntcrawford.ie or 6770335 and we will be happy to help.

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