When is a Valuation required?

The assessment of the value of an underlying security for a loan is a very important part of the lending process.

The better the assessment of the value- the better the lending outcome for the borrower.

The requirement for a more rigorous approach to valuations, has recently come into focus .Some of the reasons being:

·     Reduction/absence of value inflation to create equity in property

·     Intense competition driving lenders to accept higher LVR ratios

·     Competitive pressures on paying appropriate fees for complete valuations

·     Low-interest rates encouraging borrowers to over-borrow

·     The last GFC

A valuation is required to be undertaken in almost all circumstances but particularly when:

·     LVR exceeds 80% (LMI cover typically required)

·     Refinancing

·     multiple securities have been provided

·     agreement for Sale & Purchase specifies "without the intervention of an agent”

·     certain loan products have specialised conditions ( eg Lo/No doc or fast doc)

When the LVR is less than 80%, some lenders may use the purchase price to determine the value of the property or do a "kerbside” valuation, where the value is determined either through the lender’s valuers’ research or without the need to do an inside inspection.

If no Contract of Sale/Purchase Contract is available, a full valuation is likely to be required when:

·     LVR is likely to be greater than 70%

·     The property is non-standard residential

·     The property has not previously been occupied as a residence

·     The property has important features which cannot be reviewed from the road.

Need a property or vehicle loan?

Contact us @ propertyloans@realrenta.com


Marlene Liontis
Friday, 28 February 2020

Join our mailing list Receive Free Property Tips and news

Now Partnered With


Contact Us

1300 11 RENT (7368)