There could be many reasons for refinancing your mortgage. Whether it is to secure a lower interest rate on your home loan or unlock the equity in your home to purchase another home or renovate – the value of your property will greatly affect the success of your move. Why? Because lenders decide on lending you money based on the value of your property, apart from other factors such as your income and credit score. If the value of your property happens to be low, pushing your loan to value ratio below 20 percent, you might be required to pay Lenders Mortgage Insurance if you refinance. Thus, it is best to get your property inspected by a professional to know where you stand.

property value and successful refinancement

Getting a home loan appraisal

As a home owner, you could always contact an experienced real estate agent in your area to appraise your property. The agent would consider the market conditions and the recent sales of similar properties to give you a reasonable estimate of your property’s worth. However, you must remember that an appraisal is different from a property valuation. An appraisal is not a legally binding document and it cannot be used when you apply for a home loan. However, by requesting an appraisal from a few experienced local real estate agents, you can determine the average value of the house to make informed decisions.

Appraisal vs. Valuation

While an appraisal and valuation both determine the market value of a house, a valuation is undertaken by a professional valuer who has completed necessary qualifications. Compared to an appraisal, a valuation is a more detailed inspection of the property that considers its condition and age, functionality, appearance and room count, apart from the location and neighbourhood.

A property valuation could cost between $300-$600. It includes a written report that details the value of the property and how it was determined. Such professional valuations are used by lenders to establish the value of the property to be used as security for a mortgage.

How to get the maximum value for your house

Valuers are professionals who evaluate your property on predetermined principles and guidance, providing an unbiased view of the property’s worth to the lenders. In general, a valuer looks at the property type and size, it’s age, condition and geographical locations. Zoning restrictions also affect the overall value of a property.

Note that preparing a house for a valuer is different from preparing a house for sale. Instead of tugging at the emotional cords of a buyer with the aroma of home-baked goodies and a lush Persian rug, it takes more practical enhancements to make an impact on your property’s valuation. Of course, a lick of fresh paint on the interiors and exteriors and removing the clutter could make the house much more visible and accessible to the valuer, highlighting its positives. However, expensive fittings do not automatically mean better valuation. It is the functionality of the features that matter. For example, it costs a lot to install a pool but that does not add as much value to the house. On the other hand, mowing the lawn and improving the appearance of the house with a fresh coat of paint could make a better impression on the valuer.

Following tips could help you score better:

  • Ensure that the property is well presented
  • Enhance the look of the bathroom and the kitchen with these budget-friendly ideas
  • Adding a garage or a covered outdoor seating could improve the value of your house significantly
  • Introduce plenty of storage space in the house
  • Keep the house and lawn clean and clutter-free

Do you need a property valuation?

Banks use property valuations to safeguard themselves against defaulting borrowers. By having a professional evaluate the property minutely, banks can ensure they hold enough security against the loan they advance, reducing their risk.

The valuation report includes data such as the size of the property, constructions details, the condition of the house, information on comparable sales in the area and any issues that need to be immediately addressed. A property valuation is an essential part of most lenders’ home loan approval process and the cost varies from lender to lender.

Nonetheless, it is often possible to secure a free valuation if you are refinancing through a mortgage broker. Home owners can also order a private valuation with an individual valuation firm in the area. However, some lenders do not accept independent property valuations and require their own valuation to be done. It is best to speak to a mortgage broker to understand the costs and requirements of various lenders, better.

To know more, contact a HashChing mortgage broker online. Or, you could always start by comparing home loan deals here.


By Vidhu Bajaj,
HashChing Content Writer



HashChing is helping Australians by providing access to the pre-negotiated home loan deals. Obligation free consultation with one of our partner brokers might save you time, hassle and money.

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