MRT1 · Mortgage Law, Practice and Application
Expect MRT1 questions that make you choose the right report for a property, work out the LTV or cash gap after a down-valuation or retention, explain what a buyer can do if a valuer gets it wrong, and spot why an auction buyer must have funding ready before bidding. The marks come from knowing who the valuation is for, that lenders lend on the lower of price and value, and that a traditional auction binds the buyer when the hammer falls.
7 min read5 sections
Checked against: Walbrook (formerly LIBF) CeMAP qualification specification v14, MRT1 LO11 (AC11.1-11.3) and LO2 (AC2.1-2.2); RICS Home Survey Standard (from 1 March 2021); Smith v Eric S Bush [1990] 1 AC 831; Watts v Morrow [1991]; Consumer Rights Act 2015 s49; FCA Handbook PRIN 2A and MCOB 11.6, checked 11 Oct 2026. Independent prep, not endorsed by Walbrook (formerly LIBF).
A basic mortgage valuation answers one question for the lender: is this property adequate security for the loan? It is a limited, walk-round inspection by a valuer the lender instructs (MRT1 AC11.1 and AC11.2). Lenders may use a desktop valuation or an automated valuation model (AVM), with no visit, for low-risk cases such as low-LTV remortgages; where the model has low confidence, as for an unusual conversion, they send a valuer.
| Report | For whom | Suits | Valuation? |
|---|---|---|---|
| Mortgage valuation | The lender | Every mortgage | Yes, for the lender |
| RICS Home Survey Level 1 | The buyer | Conventional, newer homes in good condition | No; no repair advice |
| RICS Home Survey Level 2 | The buyer | Conventional homes in reasonable condition | Optional (survey and valuation) |
| RICS Home Survey Level 3 | The buyer | Older, larger, altered, unusual or run-down homes, or major works planned | Not the main purpose; depth on defects and repair options |
Every note. Every question. One pass.
3 more sections of this note are part of Premium.
From ≈£2.72/mo on the Until-you-qualify pass (18 months)
Condition ratings in Home Surveys: 1 no repair currently needed, 2 repair needed but not serious or urgent, 3 serious or urgent, NI not inspected.
Trap: Reading a valuation at the full price with no comments as a clean bill of health. It says the security is acceptable, nothing more.
Takeaway: Valuation protects the lender. Survey protects the buyer. Older, altered or cracked property means Level 2 at least, often Level 3.
Lenders lend on the lower of purchase price and valuation (MRT1 AC11.2). Do the arithmetic in this order: new loan limit, then total cash needed, then the extra over the planned deposit.
| Situation | Working | Result |
|---|---|---|
| Price £250,000, valued £235,000, 90% max LTV, deposit £25,000 | 90% × £235,000 = £211,500; £250,000 − £211,500 = £38,500 | £13,500 more cash needed |
| Price £300,000, loan £270,000, valued £280,000 | £270,000 ÷ £280,000 | LTV 96.4% |
| Price £200,000, loan £160,000, retention £8,000 | £160,000 − £8,000 = £152,000 advanced | £48,000 cash at completion |
| Price £200,000, loan £180,000, valued £215,000 | £180,000 ÷ £200,000 | LTV stays 90.0% |
After a down-valuation the buyer can renegotiate the price, add more deposit, move to a higher-LTV product if affordable, ask the lender to review with comparable evidence, or withdraw before exchange. Asking the lender to use the agreed price instead is not an option.
New-build incentives (declared on the UK Finance Disclosure of Incentives Form) can reduce the price the lender recognises, depending on its policy.
Trap: Assuming the extra cash needed equals the fall in value. With a 90% lender, a £15,000 drop costs £13,500 more cash, not £15,000.
Takeaway: Lower of price and value, always. A retention is held back from the advance, so the buyer needs more cash on the day.
