How does a bank valuation actually work?

Bayley Clarke · Mortgage broker on the road · Last checked 12 November 2026 · 7 min read

The short answer

The bank lends against the lower of what you paid and what its own valuation says the place is worth. Not the agent's appraisal, not the online estimate you looked up, its valuation.

That number decides your loan to value ratio, and the LVR decides whether you pay mortgage insurance, which rate tier you land in, how much equity you can use and whether a guarantor can come off. So the useful move is knowing roughly what the bank will say before you sign or apply, not after.

Bank valuation vs agent appraisal: which one counts

For anything home loan related, the bank valuation is the one that moves your loan. An agent looks at today's market and gives you a read on what the place would sell for, which is handy, free and the right tool for that question. But it's also a pitch for your listing, so some lean high. The bank's valuation works off settled sales, and that data only flows through once properties actually sell, so in a rising market the bank's number usually sits behind the agent's. There's no appeal to the agent's number. Why it matters on a refinance: Bank valuation or agent appraisal: which one counts?

Want to know what the bank will likely say it's worth before you sign?

Half an hour. I run the valuation tools the lenders actually use on your property, before anything goes on your file, so we're working from the bank's number, not a guess.

Book a 30 minute call Call 0437 189 939

No application, no credit check, nothing on your file. Just the numbers.

Desktop valuation vs full valuation: online report or a valuer at the door

A lot of it comes down to how much you're borrowing. Under 80% of the value, most of the time it's an online report, a desktop or automated valuation built from sales data, back in a day or two. Above 80% with mortgage insurance in play, the bank and the insurer often want a valuer to walk through. Really rural properties, acreage and anything unusual generally get someone out regardless, because the data isn't there to value them from a desk. You don't get to choose which one the bank orders: Will the bank send a valuer to the place I'm buying, or just do an online report?

Who pays for a bank valuation?

Typically the bank, because you're about to become its customer. The exceptions are very large, very rural or farm-style properties where a valuer has a long drive, and the odd lender that passes the cost on as a standard fee. In four years of running my business I haven't had a client pay for one, which is exactly why I run them up front. A valuation still isn't an approval though. Income, debts and credit still have to pass: Do I pay for the bank valuation?

Bank valuation lower than the purchase price: what happens

Say you've agreed to pay $600k and you're borrowing 80%, so you're expecting a $480k loan. The valuer says $570k. The bank now lends 80% of $570k, which is $456k, and the seller still wants $600k. That's a $24k gap you weren't planning for. The order I work through: challenge it with comparable sales, try another lender with a different valuer, and only then talk about topping up or getting out, which depends on your contract and where you're up to in any cooling-off period: The bank valued it lower than what I paid. What happens?

Off the plan is the same problem with a longer fuse. You sign at today's price and the bank values the finished place a year or two later. If it comes in short, another lender's valuation is the first move, then cash, a bigger loan with more mortgage insurance, or a guarantor. Work out before you sign where the money would come from if it landed 5 or 10% short: Buying off the plan: what happens if the valuation comes in low at completion?

Shopping valuations across lenders

Yes, this is a thing, and it's part of the job. Two valuers can look at the same sales and land $100k apart on a million dollar home. The catch is that a valuation belongs to the lender that ordered it, so picking the highest number means going with that lender, and its rate, fees and policy still have to suit you. When a deal sits right on a line, like just over 80%, a better valuation from a different lender can change the whole outcome. It can't create value that isn't there: Can my broker get valuations from a few different banks so we can just pick the highest one?

Valuations on a refinance, a reno and a guarantor's place

If you're mid renovation, wait if you can. The valuer values what's in front of them, and a bathroom that's still a demo site counts against you. Once it's finished, get a couple of valuations and go shopping: Should I wait until my renovation is finished before I refinance, or do it now?

A guarantor's property generally needs a valuer through the door rather than an online report, because that property is carrying part of your loan and the bank wants the number to be right. The bank normally pays: Can the guarantor's property use an online report as a valuation, or does it need an inspection?

LVR tiers, getting revalued down, and refinancing over 80%

Banks price loans in LVR bands. 80% is standard, 70%, 60% and 50% sit below it and can carry sharper pricing, and 90% and 95% sit above with extra fees. Renovate or ride some growth, get revalued into a lower tier and we can ask your lender for a reprice, though renovations rarely add value dollar for dollar: What's an LVR tier, and can I get revalued to drop into a lower one?

Going the other way, if values have dropped and your loan is now over 80%, you can still refinance, but mortgage insurance and higher above-80 pricing can eat the saving, and for a lot of people the right answer is to stay put until the line comes back: Can I refinance if my value dropped or my LVR is over 80%?

The honest part

A valuation isn't always wrong. Sometimes the valuer is telling you the price you agreed to is ahead of where similar places are selling. Before you throw more money at a gap, ask whether you still want the place at that price. And before you ask for a revaluation, I'll check the desktop number first. A bad valuation on file doesn't help anyone.

Want to know what the bank will likely say it's worth before you sign?

Tell me the property and what you're trying to do. I'll check the likely valuation across the lenders that suit you, where the LVR lines sit, and whether it's worth checking more than one.

Book a 30 minute call Call 0437 189 939

No application, no credit check, nothing on your file. Just the numbers.

Common questions about bank valuations

Is a bank valuation the same as an agent appraisal?+

No. An appraisal is an agent's view of what the place would sell for today. A bank valuation is what the lender will lend against, built from settled sales, and it often sits below the appraisal in a rising market.

Who pays for a bank valuation?+

Usually the bank. The exceptions are very large, rural or farm-style properties, and a few lenders that charge it as a standard fee.

What happens if the bank valuation is lower than the purchase price?+

The bank lends against the lower figure, so the difference comes from you. Challenge it with comparable sales, try another lender, and only then look at topping up or your contract options.

Will the bank send a valuer or do an online valuation?+

Under 80% it's often an online or desktop report. Above 80% with mortgage insurance, or on rural and unusual properties, a valuer usually comes out. The bank decides, not you.

Can I get valuations from different banks and pick the highest?+

Yes, but each valuation belongs to the lender that ordered it, so you go with that lender. Its rate, fees and policy still have to suit you.

Next question

What is LMI, and do I actually have to pay it?

The cost that kicks in when the valuation puts you over 80%.