When you’re buying a home or refinancing your loan, we’ll often need to get a bank valuation. This is because we need to know that we’re lending you the money responsibly.
What we use a bank valuation for
We have to make sure we’re not giving you a home loan that is more than the value of the property.
When you take out a home loan, we use the home as security. For you, the security means that you can borrow more at a lower interest rate than without security for the loan. For us, this means that if you have difficulties with the loan and you’re no longer able to make the repayments, we may have to sell the property to pay back the loan.
If this happens, we’ll sell the home quickly to avoid the interest accumulating over a long period. Unfortunately, we may sell the home at a lower price than you’d get if you sold the home without this time limitation. This is the figure we assess for when we get a bank valuation.
What we look for in a bank valuation
Sometimes, we may need to get access inside the property and at other times we can do a valuation from the street. Generally, we work out the value by looking at the home for details such as:
- general location and council zoning
- overall size and number of rooms
- vehicle access to the property
- building structure and condition.
We don’t always tell you the bank valuation
We use a bank valuation to work out how much we can lend you responsibly. Sometimes, the figure we use will be less than the market value of your home and we don’t always tell you how much it is. We’re not hiding anything. We just don’t think that the bank valuation is as useful to you as knowing the market value.
A bank valuation is not the same as the market value
A bank valuation will nearly always be less than the market value. This is because they’re not the same thing.
We use a bank valuation to work out how much we might get if we sold the property. We’ll only sell your home if you’re having serious trouble with the loan or you’re really behind with your mortgage repayments. This may sometimes be for a lower amount than you’d ask for.
On the other hand, the market value of your property is how much you’d get if you sold the home yourself. When you’re selling, you can generally watch the market, wait until the time is right and get the price that you want a competitive price that matches similar properties in your area.
Finding out the market value of your home
If you’re interested in getting an idea about the market value of your property you can use NAB Internet Banking to download a property report from RP Data. You can also use a valuation service or ask a real estate agent to give you an estimate.
