A lot of people concern the issue about the property valuation, because it may result in more funds to complete required because of less mortgage granted by banks if valuation is less than contract price. In contrast, when the valuation of the property is higher than its contract price, the funds to complete decrease.
Three valuation methods
Unconditional loan approval requires an acceptable valuation of the security. Banks normally will use one of these valuation methods including: full valuation, desktop and kerbside.
–Full valuation
A full valuation means to have an internal inspection of the property. By undertaking an internal inspection, a valuer will give a comprehensive judgement on the property value in details including overall condition of the building, location, level and surroundings, as well as recent sales of similar properties close by.
-Desktop valuation
Desktop valuation is a process of determining the value of property based on the information of the property and surrounding properties recent sales. Report of valuation is generated on the computer straightway.
-Kerbside valuation
Kerbside valuation means valuer will inspect the property by driving by the property without internal inspection.
The valuation of Pre-owned house
Preowned house usually adopts the methods of desktop and kerbside valuation, and some time use full valuation. The price of the second hand house is determined by the sales records in the current market. Because there is not much difference to full valuation, the bank always adopts the methods of desktop and kerbside valuation or even take contract price directly when they assess the property value.
Tip
There are various valuation policies between different banks. For example, there are some banks won’t do valuation if the property is not over 1-1.5 million. To know more, please call 1300 880 123.
The valuation of off plan property
The valuation of off plan property always uses full valuation. Because the contract price does not normally reflect the current market. It is an estimated price to anticipate the value after several years. However, when the construction finished after several years, the price may not match the contract price. The full valuation is necessary.
The first step is that broker order the valuation through bank and the bank would authorise the third party to process the valuation and get a valuation report that reflect the current market of the specific property.
If the valuation price is larger than contract price, it means bank would approve the loan based on the valuation price. To illustrate, for example, the contract price of a property is 1 million with the 10% deposit, the client has to prepare the rest 0.9 million. But if the valuation price is 1.2 million, the bank will approve 0.96 million based on 80% loan to value ratio. Compare with the 0.9 million, there are 60 thousand dollars extra that can be cashed out from bank. The increase in property value offer opportunity to get more cash on hand on settlement. Adversely if the valuation is below the contract price, you have to pay more money for settlement
Conclusion by VIP Mortgage Solutions
You must be very exciting to know your property value, if you have any question related the process of property valuation. Please contact us, we will assist you to prepare the property valuation and provide a loan solution plan to save your time and money.
