If you want to buy a house with a loan in Australia, you must first get a pre-assessment of the bank loan. After getting the pre-assessment, the next most important step is to assess the price of the purchased house, and determine the loan ratio according to the assessed price.
Many borrowers believe that the loan amount is based on the actual price of the house transaction, but in fact it is not. The bank will find a third-party agency to value the property after the bank’s approval, and the result of the valuation will eventually be used as the basis for the loan amount.
What is house valuation
The different between house market value and Property valuation
Market value of the house: Refers to the buying and selling price of a commodity on the open market. Simply put, it is the true price at which buyers are willing to sell and sellers are willing to sell.
Property valuation: Refers to the valuation or prediction of a certain property in the market by a professional appraisal agency. This result is not accurate, and no matter how professional the appraiser is, he cannot fully accurately determine the market price of the property.
Housing appraisal is a very professional and difficult job, but at the same time it will have some subjective factors. The house appraiser will judge the value of the property based on factors such as the location, floor, location, interior decoration, and historical transaction prices of surrounding properties.
The appraisal is done by a third-party appraisal company appointed by the bank to ensure the fairness, impartiality and accuracy of the appraisal report. Different banks may also use the same appraisal company to do the appraisal, which fully shows that the appraisal report is not affected by banks or other institutions.
Three methods of house valuation
There are three different ways of house valuation, including system query (Automated desktop valuation), roadside valuation (Kerb-side valuation) and full field valuation (Full valuation).
System query or system evaluation through AVM, etc. is suitable for the evaluation of some low-risk properties. Banks sometimes judge that the purchased property is unlikely to depreciate or have low borrowing risk, and will adopt a system query method. This method There will be a relative saving of manpower and time.
Sometimes banks only need to appoint an appraiser to make an appraisal on the roadside of the property, without having to walk into the property. This kind of evaluation method is mostly suitable for House. The appraiser observes the property on the side of the road and makes judgments based on the surrounding geographic location, environment, and land area.
A comprehensive field assessment report, that is, house inspection, is mostly applicable to apartments. In addition, some banks also require a comprehensive assessment of properties with house prices above 1 million to 1.5 million.
Requirements for Security
In Australia, the real estate purchased by our loan is actually mortgaged to the bank in the form of a collateral, and the bank lends to the applicant through the valuation of the collateral.
Then, for different types of collateral, the mortgage requirements of each bank are different. Generally speaking, there are restrictions on loans for houses with relatively small areas, especially studio loans. Many lending institutions do not accept applications for mortgages of less than 50 square meters, and they worry that this kind of real estate is risky when it is auctioned.
When inner city apartments are used as collateral for loans, most banks also strictly control the loan amount, usually to 70% or even lower of the property value. Inner city apartments are generally defined by banks as apartment buildings located within a specific zip code range, usually located in the CBD of a capital city, and are also called high-density apartments.
If the house you are buying is defined as a high-density apartment, then its loan line ratio may be restricted.
In addition, lending institutions will also differ in terms of real estate loans located in relatively remote or mainstream purchase areas. Generally speaking, properties located in large cities will be given priority over mortgage applications located in rural areas with small populations. In the same way, it is easier to obtain approval in areas with higher real estate prices than in general areas, so the proportion of loans for real estate in more distant areas is also relatively low.