When evaluating your mortgage application, lenders and banks will often carry out valuations of your collateral property to estimate the Loan-to-Value Ratio (LVR) of your application, which is a major determinant of how much you can borrow.
Desktop Valuation
Desktop valuation is a type of automated price estimation using a property database in the surrounding area of your property. The value of your property is roughly estimated with historical transactions around the area/suburb of your property that is of similar size and age.
Lenders and banks will usually carry out a desktop valuation to make a primary quick estimation of your property value to initiate the lending process. It is very common for lenders to conduct a kerbside or full valuation in the later stages of the lending process as well.
Kerbside Valuation
Usually conducted in complement with desktop valuation, kerbside valuation will have a valuer visit your property and conduct an examination on the exterior of your property and the surrounding neighborhood. This ensures the rough estimation is reasonable by taking the exterior of the property and its location into consideration.
If the estimated LVR based on this valuation is within the bank’s acceptable LVR ranges and no irregularities are found, kerbside valuation is usually what the lenders and banks will use for the mortgage application.
Full Valuation
If your lender or bank considers the property value to be on the uncertain side, a full valuation is often required. Full valuation is a comprehensive assessment of a property by a professional valuer, looking at both the interior, exterior, structure and surrounding neighborhood of a property.
Full valuation is more expensive and time-consuming than the previously mentioned valuation methods, but lenders will also deem them compulsory if they think it is necessary.
If there is insufficient data on your property for desktop valuation and kerbside valuation, your lenders may require a full valuation to minimise the risks they are exposed to.
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