What do home appraisers look for when refinancing in Sydney?

If you're a homeowner in Sydney, you've likely heard the terms 'home appraisal' and 'mortgage valuation' thrown around, especially if you've considered refinancing your home. But what do these terms mean, and how do they impact your refinancing process? Let's break it down in a way that's easy to understand.

Firstly, it's important to understand the difference between a home appraisal and a mortgage valuation. While they might seem similar, they serve different purposes and are conducted in different ways. A mortgage valuation is a formal report conducted by an accredited valuer to determine your property's market value for mortgage purposes. On the other hand, an appraisal is an informal guide provided by real estate professionals, based on their knowledge of the local area and recent sales prices.

Mortgage Valuations

Let's take a look at mortgage valuations first. The primary purpose of a mortgage valuation is to provide a lender with an accurate value of your property. This is crucial when you're purchasing a new property or refinancing an existing one. The valuation takes into account several factors, including the location of your property, its type and size, its condition, and local council zoning.

For instance, a property located in a prime Sydney suburb like Bondi or Manly is likely to have a higher value than a similar property in a less sought-after area. Similarly, a well-maintained property will have a higher value than one in poor condition.

When you're refinancing, it's essential to have an up-to-date valuation. This is usually organised by your lender, but you can also arrange for an independent valuation. However, keep in mind that independent valuations can cost between $300 and $600.

Why is an accurate valuation so important when refinancing? Well, refinancing can help you lower your monthly payments and switch from an adjustable-rate to a fixed-rate mortgage. But to do this, your lender needs to know the current value of your property.

Home Appraisals

Moving on to home appraisals, these provide a guide to your property's value and can help set an expected selling price. Appraisals are based on the appraiser's knowledge of the local area and recent sales prices.

For example, if you own a property in Sydney's Eastern Suburbs, a local appraiser would look at recent sales prices of similar properties in the area to provide an estimate of your property's value. This can be incredibly useful when you're looking to sell your property or refinance your mortgage.

But appraisals aren't just about determining a selling price. They also play a crucial role in the mortgage application or refinancing process. Lenders employ professional home appraisers to assess the market value of your property. This market value is an estimate of a suitable selling price based on current market conditions.

Understanding your property's market value can have significant benefits. For instance, if your home's value increases, you'll have more home equity. This can be beneficial when refinancing or securing a home equity loan.

Distinguishing between the Key Components: Market Value and Assessed Value

Market value and assessed value are two different ways of evaluating a property's worth. Market value is an estimate of what a property would sell for under current market conditions. It's based on factors like the property's location, size, condition, and comparable sales in the area. On the other hand, assessed value is often lower than market value and is used primarily for tax purposes. It's determined by the local council and takes into account the property's size, location, and zoning.

Home Value and Its Importance

The value of your home plays a significant role in your financial status. It contributes to your net worth, which is the total value of your assets minus any liabilities. If your home's value increases, so does your net worth. This can be beneficial when applying for loans or refinancing your mortgage.

The assessed value of your home also impacts your annual property taxes. The higher the assessed value, the more you'll pay in property taxes. However, if your home's assessed value is lower than its market value, you could be paying less in taxes than you should be.

Changes in home value can have significant implications for homeowners. If your home's value increases, you could have more equity in your home. This could allow you to refinance your mortgage or secure a home equity loan. Conversely, if your home's value decreases, you could end up owing more on your mortgage than your home is worth.

Role of Home Appraisers in Refinancing

Home appraisers use a variety of methods to determine a property's market value. They consider factors like the property's location, size, condition, and comparable sales in the area. They may also consider any improvements or renovations made to the property.

Home appraisers play a crucial role in the mortgage application and refinancing process. Lenders rely on their assessments to determine how much they're willing to lend. If an appraisal comes in lower than expected, it could affect the terms of your loan or even cause your application to be denied.

Understanding your home's market value can help you make informed decisions about refinancing. If your home's value has increased, you may have more equity and could potentially secure a lower interest rate or better terms on your loan.

Understanding Loan Underwriting

Loan underwriting is the process by which a lender evaluates a borrower's ability to repay a loan. It involves assessing the borrower's credit history, income, employment status, and other financial factors.

There are two types of loan underwriting: automatic and manual. Automatic underwriting involves using software to evaluate a borrower's risk, while manual underwriting involves a human underwriter assessing the borrower's financial situation. Manual underwriting can be beneficial for individuals with unique financial situations.

Understanding the underwriting process can help you prepare for a mortgage application. By knowing what lenders are looking for, you can take steps to improve your financial situation and increase your chances of approval.


In conclusion, understanding the difference between market value and assessed value, the role of home appraisers, and the underwriting process can be beneficial when refinancing your home. These factors can impact your financial status, your property taxes, and your ability to secure a loan.

For those looking to refinance, it's crucial to understand these factors. By doing so, you can make informed decisions and potentially secure better terms on your loan. So, take the time to understand your home's value, the role of appraisers, and the underwriting process. It could save you money in the long run. If you need more assistance, you can take a look at Sydney's best mortgage brokers, who will walk you through the entire refinancing process, answering any questions you have.

About the author 

Harold Simmons

Harold is the founder and creator of the Asset Owners Discussion Project. He creates quality resources so investors can get access to information they wouldn't normally be able to access. He has been investing in real estate for almost three decades and is particularly experienced with mortgages and refinancing.

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