Property valuation is essential in the mortgage application process of residential, industrial, commercial properties and shops. It does not only provide you with a reliable price indication of the property, but also affects the actual loan amount of the mortgage.
When a buyer applies for a mortgage, a bank will appoint a designated surveyor to assess the valuation of the property. If the value is lower than the transaction price, the bank may adopt the valuation price for the mortgage loan amount calculation.
The property value defines the mortgage amount. For example, if a person bought a house with the transaction price of $8,000,000, and he applied for the mortgage with loan-to-value ratio (LTV) of 60%, the loan amount is originally $4,800,000. However, if the value of the property is only $7,500,000, the bank will adopt the lower one and the ultimate loan amount will be adjusted to $4,500,000 ($7,500,000 x 60%). The borrower needs to pay an extra $300,000 for the transaction. If he cannot afford the price, he may need to forfeit the deposit.
Factors influencing the property valuation
Many factors affect the value of a property, such as the property age, size, location, floor, direction, transport facilities and property management. If the value is much lower than the transaction price, the buyer needs to think about the reasons behind. Is the transaction price not reasonable? Is the property too old? Or is the house involved with murder or suicide event?
Each bank appoints different surveying companies for conducting the valuations so the result may be varied from each other. The valuation of Bank A can be much higher or lower than Bank B. So it is important to compare the valuation with different banks. If the value quoted from Bank A is $6,500,000 but the value from Bank B is $7,000,000, the borrower can choose the second one.
mReferral offers a free valuation service
mReferral offers a free valuation service with different banks for borrowers. Before signing the sales and purchase agreement, you can contact our mReferral team directly for valuation. You may also fill in the form of property valuation, with the information of property type, address and personal information, our mortgage professionals will contact you shortly.
Alternatively, you may try to use our free online valuation services to get a valuation price from Bank of China instantly as a quick reference.
If you want to learn more information about mortgage or need help from our mReferral mortgage team, please feel free to reach us at 3196-6688.
;){kind=link}
;){kind=link}