Valuations
The property valuation plays a vital role in your finance application, particularly when property values shift.
When a lenders credit team processes your home loan application, their main objective is to assess for risk. First they want to establish your ability to meet the repayments for the term of the loan. Second, they assess the property as a saleable asset. So as a fallback, what is the property value and how much could it be sold for?
The property valuation is provided by an independent valuer, who typically assesses your property in person and provides a report to the lender. The report will place a value on the property, provide commentary about the property and what similar properties are selling for in the area.
Expect your lender valuation to be conservative
In a high percentage of cases, lender valuations come in lower than what you believe the property is worth. If you aren’t expecting this, it can be disappointing and frustrating.
Low valuations can sometimes be your friend
The valuation is effectively an audit on the property sale price, so if you have had a valuation come in below the agreed price, while it is disappointing it could be time to start renegotiating. If the vendor won’t budge, perhaps reconsider if this property is the right one for you. This is particularly helpful if you are buying in an area that is unfamiliar to you.
The amount you can borrow will be driven by the certified valuation.