Property ValuationGetting a Property Valuation done is generally a key component of getting a Mortgage.The Lender needs to be sure that what you are paying for a property, is actually what it is worth. That way they know that they have sufficient security in the property to minimize their lending risk. Equally, you need to know that what you are paying for a property is what it is worth! COUNCIL RATEABLE VALUE Sometimes a recent Rateable Value - which is determined and issued by your Local Council - will be enough to satisfy the Bank. The Rateable Valuation is used by Council to work out how much you should pay in Rates each year. There are pros and cons as to whether a high or low home valuation works best for you. 1. PRO : A low value means paying less rates. YOUR OWN MARKET RESEARCH Do your own Market Research as well. TradeMe and similar property websites are useful for this. Simple comparative techniques should give you a good ballpark idea of where the house value will sit. FOR EXAMPLE: After a while these comparisons naturally come to mind when looking at properties to buy. But remember that a lender will ultimately want the word of a Registered Valuer - rather than your opinion - so this is just a useful technique to help you work out the approximate value of a property. TAKE ADVANTAGE OF RESOURCES THAT WILL HELP AND INFORM YOU A really good website that covers a wide range of topics related to building and buying a house is ConsumerBuild. ConsumerBuild aims to provide clear, independent and up-to-date information to the public about building, buying, renovating and maintaining houses in New Zealand. REGISTERED VALUER However, if this is not the case, then you need to engage the services of a Registered Valuer. Obviously this is going to cost you more money, but should ensure that your investment is worthwhile. In New Zealand a Registered Valuer is required to pay an annual registration fee to the Valuers Registration Board. If they practise as a registered valuer for the public, they must also take out an annual practising certificate from the VRB for a fee. You can find out more about the Valuers Registration Board here. When you are getting a Valuation done you need to be sure that your Valuer is Registered. How Does The Bank Use The Valuation?A Bank or Lender will have their own set of rules around what % of a property's value they will loan you.This is often referred to as the LVR or Loan to Value Ratio. What the LVR can be will depend on why you are purchasing the property. If it is going to be your home the rules are different to buying a rental or investment property. There are also often differences in asset valuation requirements between buying residential property as opposed to lifestyle or rural property. So the exact LVR result will be determined by your individual purchasing circumstances. AN EXAMPLE OF LVR: PROPERTY VALUATION: $500,000 This LVR may or may not be acceptable to a Lender depending on their criteria. - Your own home: 80% or less - Rental or Investment Property: 70% or less - Commercial Property: 60% or less Go from Property Valuation to Mortgage Brokers |
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