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How Property Valuations are Determined
The valuation will be determined by an independent property valuation company. They will consider the condition of the property itself as well as recent sales of similar properties in the same local area. The valuation determines more than whether or not the property qualifies for the loan you need. It also is used for:
LMI The valuation figure directly impacts your Loan to Value Ratio (LVR) which lending institutions use to determine whether or not you will need to pay additional Lenders mortgage Insurance (LMI). Generally, if your Loan to Value Ratio is more than 80%, most lenders will require the borrower to pay for Loan mortgage Insurance. FHOG In addition, the LVR determines whether or not first time buyers qualify for the federal government sponsored First Home Owner Grant (FHOG). The amount varies by state and federal territory and you should consult with your lender to determine whether or not you are eligible for this grant. You cannot apply for the grant until you have both a loan pre-approval and a signed contract of sale. Your lender can advise you as to any other documentation you might need in your local area such as acceptable proof of ID. You can apply for an FHOG by yourself or through your mortgage lender. Lenders will handle the application process from the first to the last step; a significant advantage in time and effort. In either case, the grant goes directly into your mortgage account and is available for use at settlement. Obviously, the valuation figure determined by the independent company is important. If you feel the number is too low, you can work with your lender to challenge the valuation. |
