Quick answer
For most loans, the lender orders the valuation through its own panel of valuers, so you do not usually pick the valuer. The valuation can be a desktop, kerbside or full inspection, depending on the loan and the lender. A low result can reduce how much you can borrow, but you can often dispute it with evidence.
Key points
- Lenders generally arrange the valuer, and an agent's appraisal is not the same thing.
- Valuation types range from desktop to kerbside to a full inspection of the interior and exterior.
- A low valuation reduces the loan amount a lender will offer against the property.
- Private and specialist lenders may have different valuation approaches, which your broker can explain.
What is a property valuation for a loan?
A valuation is an independent assessment of what a property is worth, prepared by a qualified valuer. A lender uses it to decide how much it can safely lend against the property, because the property is the lender’s backup if repayments stop. The figure it produces feeds directly into the loan to value ratio, which our guide on what is LVR explains.
Two things get confused with a valuation. An agent’s appraisal is an opinion of a likely sale price, usually free and informal. A contract price is what a buyer agreed to pay. Lenders typically look at the lower of the contract price and their own valuation, so a strong purchase price does not guarantee that the valuation will match.
Who arranges the valuation?
In most home loan applications the lender orders it, usually through a panel of valuers or a valuation management company. This is intentional. The lender wants an independent report it can rely on, which is why handing over your own report does not always work. Lenders may accept a recent report in some circumstances, but that is a lender policy question, and a broker can usually find out quickly.
Some borrowers want to commission their own valuation early, for example to understand their equity before applying or to plan a sale. That is a legitimate step, but it is informational for you rather than a replacement for the lender’s valuation.
What types of valuation are there?
The main types, in order of effort, are:
- Desktop valuation: no physical visit, based on public data and the lender’s models. Often used for lower-risk loans, usually with a modest loan to value ratio.
- Kerbside valuation: the valuer looks at the outside of the property and takes photos from the street.
- Full valuation: an inspection of the interior and exterior, with comparable sales analysis. Lenders typically use this for riskier lending, such as low deposit, low doc or unusual properties.
Which type is used is the lender’s call, and it can depend on the loan size, the property type and your profile. A rural property, a commercial building or a development site is likely to need a full valuation by a valuer with the right specialisation. For those, see what lenders look for in farm valuations and commercial LVR and valuation explained.
How long does a valuation take and what does it cost?
Timing ranges from near-instant for a desktop assessment to several days for a full inspection, depending on the valuer’s availability and access to the property. Costs also vary, and many lenders cover or absorb the fee on certain loans while charging it on others. Ask in advance, and do not assume a fee is refundable if the application does not proceed. Speed can be possible with private lenders, but it depends on the lender, the security and how quickly documents arrive.
How can you prepare the property?
A valuer sees what is in front of them, so presentation and information help.
- Make sure the valuer can get in on the day, and that someone can answer questions.
- Tidy the exterior and the main living areas.
- Have a list of renovations and improvements, with dates and approximate costs if known.
- Provide the title details and a recent rates notice (see how to get a property title search).
- Note any unapproved works honestly, since a valuer or lender may find them later anyway.
Supplying a short list of recent comparable sales nearby can also help the valuer see what you see, though the valuer remains independent.
What if the valuation comes in low?
A low valuation reduces the maximum loan, because the lender applies its loan to value limit to the valuation figure rather than your expectation. Practical options are:
- Ask the lender for the valuation report and check it for factual errors, such as the wrong number of bedrooms or missed improvements.
- Provide recent comparable sales that the valuer may not have considered, and ask for a review.
- Ask whether another valuer on the panel can be used. The lender decides, and there is no guarantee of a better result.
- Reduce the loan amount, add a deposit or offer additional security.
- Look at a different lender, whose policy, valuer or product may suit the property better.
A lender is not obliged to lend more than it wants to, so the evidence you present is what moves the needle. If you are buying, the contract may have a finance clause, so speak to your broker and conveyancer quickly.
Do private lenders handle valuations differently?
Often, yes. Private lenders such as those behind a second mortgage, a short-term bridging loan or a private first mortgage tend to focus on the property and the loan to value ratio, so the valuation is central. Their valuer panels and timelines can differ from a bank’s, and some may accept a recent independent report or a particular style of assessment for certain loans. Because policies vary, ask your broker rather than assuming.
If you are refinancing, the same steps apply. The page on home loan refinance outlines the process, and the guide on how to refinance when your bank says no is useful if a valuation has been part of the problem.
How does Ownright help with valuation issues?
Ownright is about solutions. Trevor Scott and the team, with more than 40 years of finance experience behind them, regularly work with properties that standard lenders find awkward: acreage, rural land, mixed-use buildings and properties with title complexities. We arrange finance in every state and territory, and we know which lenders are comfortable valuing what.
An illustrative example: a bank’s valuation on an older house with a large block comes in below expectations. A broker may take the same property to a lender that values land-heavy properties differently, supported by comparable sales for the area. The result is not guaranteed, but the approach is worth exploring.
What valuation mistakes are worth avoiding?
- Treating an agent’s appraisal as the number the lender will use.
- Not checking whether a fee applies before the valuer is booked.
- Leaving out improvements or approvals that add value.
- Applying to several lenders at once and triggering several valuations and credit enquiries.
For a broader preparation list, use how to get loan ready alongside what documents do I need for a loan.
How does valuation interact with LVR and the loan amount?
The loan to value ratio compares the loan to the property’s value, and the lender usually applies it to the valuation figure. A higher ratio generally means fewer lender choices and closer scrutiny, while a lower ratio gives more room. The relationship works like this:
| Situation | What tends to happen |
|---|---|
| Valuation matches or exceeds the price | The loan proceeds on the planned numbers |
| Valuation slightly below | A small top-up of deposit or reduction of the loan may fix it |
| Valuation well below | The deal may need renegotiation, more security or a different lender |
| Unusual property | A specialist valuer or lender may be needed |
For a second mortgage, the valuation matters twice: the lender needs to know the value, and also how much sits ahead of its loan. The guide on first, second and third mortgages shows why ranking changes the risk.
When is a valuation needed outside a standard home loan?
Valuations also appear in:
- Business loans secured on property, where the valuer may consider the use of the building. See secured business loans.
- Farm and rural lending, where land, improvements, water and plant can all be assessed separately.
- Development sites, which may be valued as is and on completion.
- Equity release or top-ups, where an updated valuation shows how much equity is available. Our page on home equity loans and the equity calculator offer a starting point.
Knowing which valuation your loan needs, and who orders it, helps you plan timing. Book the conversation with a broker before you pay for anything, so you do not pay for a report that the lender will not accept.
Sounds like your property is the key to the loan?
Sounds like you’re looking for finance secured on property, and the valuation is the piece holding it together. We’re the lending experts in property-backed loans of every kind, from commercial property loans to private mortgages, so click the button and see if you qualify.
Frequently asked questions
Who arranges a property valuation for a loan?
Normally the lender, through a panel of valuers it trusts. This protects the lender's interest, because the valuation helps decide how much it will lend against the property. Borrowers often can not pick the valuer, although a broker can tell you how a particular lender handles it and whether an existing report may be accepted.
Who pays for the valuation?
It varies. The cost is often passed on within buying or refinancing costs, and some lenders waive it for certain loans. A lender will tell you in advance. Always ask before the valuer is booked, since a full valuation can carry a fee and may not be refundable if the loan does not proceed.
What is the difference between a valuation and an appraisal?
An appraisal is usually a real estate agent's opinion of likely sale price, often free and informal. A valuation is carried out by a qualified valuer and is used by a lender to assess security. Lenders generally rely on their own valuation rather than an agent's estimate when assessing a loan.
What can I do if the valuation is lower than expected?
Options include asking the lender to review it with comparable sales you can supply, asking whether it will use a different valuer, adjusting the loan amount, adding extra security, or looking at a lender with a different approach. A lender does not have to lend more than it wants to, so evidence matters.
Do private lenders need a valuation?
Many do, but the format may differ. A private lender may accept a certain type of report, or order its own, depending on the loan size, the property and the loan to value ratio. The valuation still matters because the property is the main security. Your broker can confirm what a specific lender needs.