Understanding bank valuations on your property

Why bank valuations matter?

When you’re buying a home, refinancing or accessing the equity in your property, your lender needs to know exactly how much the property is worth. This is where a bank valuation comes in, a process where the bank independently assesses the market value of a property to help them determine how much money they can safely lend you. The valuation gives the bank confidence that they will be able to recover the loan amount should you be unable to repay the loan, and they need to sell the property. A valuation helps the bank manage their risk, making it a key part of your home loan approval process.

As a borrower, a valuation can impact how much the bank will lend you. For instance, if the valuation is lower than what you’ve agreed to pay, you may either need a bigger deposit or a smaller loan. Alternatively, you may need to pay lenders mortgage insurance (LMI) if your loan to value ratio (LVR) is above 80%.

Factors to consider in your property valuation

Your lender may need to get access inside the property or may do a valuation from the street. Generally, lenders will work out the value by looking at the home for details such as:

• General location: Access to amenities like schools, shops, child care, transport and overall suburb demand.
• Condition: How well the property is maintained and whether repairs are needed.
• Size and layout: The land size, the number of bedrooms and bathrooms, vehicle access to property and how practical the layout is.
• Comparable sales: Recent sales of similar properties in the area.
• Marketing conditions: Whether property values are rising, falling or stable. 
• Zoning and land use: Any restriction or development potential attached to the land.

How long does a bank valuation take?

A bank valuation typically takes anywhere from 2-5 business days from the time the inspection happens. 

Here’s a rough breakdown of the process:

Inspection: The bank hires a professional valuer who visits the property. The inspection usually takes around 30 minutes to an hour.

Research and reporting: The valuer then compares the property to similar properties which have recently sold in the area and writes up their report.

Delivery: They send the final report to the bank, who uses the information to assess your loan application.

Finding out the market value of your home

If you’re interested in getting an estimate about the market value of your property you can access reports from NAB Property Insights, opens in new window. You can also use a valuation service or ask a real estate agent to give you an estimate. Remember it’s not an exact science and the market value is just a guide of what your property may be worth.

We know that the home loan process can be daunting. When the time comes, don’t feel like you have to do it on your own. Call us on 13 78 79, visit your local branch, make an appointment with a mobile banker or, if you’re ready, feel free to apply online.