Everything You Need to Know About Property Valuation

When applying for a home loan, property valuation plays a crucial role in determining your loan amount and the terms you'll receive from lenders. For Burswood residents looking to purchase property or refinance their existing mortgage, understanding this process can significantly impact your financial outcomes.

What Is Property Valuation and Why Does It Matter?

Property valuation is an independent assessment of your property's current market value, conducted by a qualified valuer. This valuation directly influences several key aspects of your Home Loan application:

• Your maximum loan amount
• Whether you'll need to pay lenders mortgage insurance (LMI)
• The interest rate you'll be offered
• Your loan to value ratio (LVR)

Lenders use this valuation to assess risk and determine how much they're willing to lend against the property. The valuation figure becomes the foundation for calculating your borrowing capacity and establishing the terms of your mortgage.

How Property Valuations Affect Your Loan Terms

The relationship between your property's valued price and your loan amount determines your LVR. This ratio significantly impacts your mortgage terms:

LVR of 80% or below:
• Access to standard home loan interest rates
• No LMI required
• Access to premium Home Loan options from banks and lenders across Australia
• Potential eligibility for interest rate discounts

LVR above 80%:
• LMI premiums added to your loan
• Potentially higher interest rates
• More stringent application requirements
• Additional documentation needed during the application process

The Property Valuation Process

Once you submit your Home Loan application along with required documents such as bank statements, your lender will order a valuation. The process typically involves:

1. Appointment scheduling - The valuer contacts the property owner or agent
2. Property inspection - Internal and external assessment of the property
3. Market analysis - Comparison with recent sales in the area
4. Report preparation - Detailed valuation report for the lender

Valuers consider multiple factors when assessing your property, including location, condition, size, recent renovations, and current property market conditions in Burswood. They'll also examine comparable sales data from similar properties in your area.

Factors That Influence Property Valuations in Burswood

Several elements can impact your property's valuation:

• Location and proximity to amenities, transport, and employment hubs
• Property condition and any recent improvements or maintenance issues
• Market trends affecting the broader Perth property market
• Comparable sales in your immediate neighbourhood
• Property features such as parking, outdoor space, and internal layout
• Economic factors influencing buyer demand in the area

Understanding these factors helps you prepare for the valuation and potentially address any issues that might negatively impact the assessed value.

When Valuations Don't Meet Expectations

If your property valuation comes in lower than the purchase price or your expectations, you have several options:

Renegotiate the purchase price - Use the valuation as evidence to negotiate with the seller

Increase your deposit - Reduce your LVR by contributing more upfront capital

Consider different lenders - Some lenders may accept alternative valuation methods

Request a second valuation - Though this involves additional costs and isn't always successful

Calculating Home Loan Repayments Based on Valuation

Once your property valuation is confirmed, you can accurately calculate home loan repayments for both variable interest rate and fixed interest rate options. Your mortgage broker can help you compare:

• Variable home loan rates that fluctuate with market conditions
• Fixed interest rate home loan options providing payment certainty
• Hybrid products combining both rate types
• Offset account benefits that can reduce interest charges

Home Loan rates vary significantly between lenders, making professional guidance valuable when selecting the most suitable product for your circumstances.

Getting Pre-Approved Based on Estimated Valuations

Home Loan pre-approval can help you understand your borrowing capacity before you start property hunting. During this streamlined application process, lenders often use automated valuation models or desktop assessments to provide initial approval.

However, full approval remains conditional on a formal valuation once you find a property. This makes it important to have realistic expectations about property values in your target areas when seeking pre-approval.

Using Home Equity Through Accurate Valuations

For existing homeowners in Burswood, property valuations are essential when accessing home equity for renovations, investments, or debt consolidation. Higher valuations can unlock:

• Additional borrowing capacity against your property
• Opportunities for refinancing to more favourable terms
• Access to equity for investment loans or property portfolio expansion
• Removal of LMI if your LVR has improved since purchase

Property valuations directly impact stamp duty calculations in some scenarios and influence your overall financial situation when making property-related decisions.

Working with experienced mortgage professionals ensures you understand how property valuations affect your specific circumstances and helps you access the most suitable Home Loan options for your needs. Whether you're buying your first home or looking to upgrade your existing property, professional guidance can help you achieve your property goals.

Don't let property valuation uncertainties delay your home loan journey. Call one of our team or book an appointment at a time that works for you to discuss your property financing needs and explore your available options.