How to challenge a bank valuation

The higher value changed the LMI and rate options available to Neil and Sabrina.

A second bank will not always return a higher value. In this case, a fresh valuation through a suitable lender was more useful than disputing the first result.

At the $500k price, the same $400k loan would be 80% of the value. Against the bank's $450k valuation, it's 88.9%. That higher loan-to-value ratio, or LVR, can bring in lenders mortgage insurance, rule out some lenders or mean the loan no longer fits.

Your $50k deposit and $50k of cash still cover the price, so in this example the valuation gap doesn't become a cash gap. You'd still need extra money for stamp duty, legal and lender fees, any LMI not added to the loan, and settlement adjustments.

Illustration only: the purchase price is $500k in all 3 rows. LVR is the loan divided by the lender's $450k value. The figures exclude purchase costs and any LMI added to the loan. A low valuation has different consequences depending on how much you need to borrow.

Ask your broker or lender which valuation method was used and whether you can get a copy or summary. The method helps identify what evidence might be missing.

APRA's current residential mortgage lending guide recognises full on-site, desktop, kerbside, automated and contract-of-sale assessment methods in the right context. It also says the need for specialist valuation increases as property risk rises or the loan has less value coverage.

An agent's appraisal or online estimate helps you research the price. The lender needs a valuation it accepts for the loan. Paying for your own report does not guarantee the bank will use it, so ask before ordering one. CommBank explains the different valuation purposes.

I would rather send one factual correction and 3 strong settled sales than 20 listings chosen for their high asking prices.

Check the address and title, land size, internal living area, bedrooms, bathrooms, car spaces, property type, construction status, condition and completed improvements. State the exact error, attach the source that corrects it and explain why it affects the comparison.

A council record, registered plan, approved building plan, occupancy document or dated evidence of completed work is stronger than a general description from an agent.

Start with recent settled sales nearby, using RP Data from Cotality (formerly CoreLogic) or the sold section of property websites. About 2 km and 6 months is a useful first search.

Those distances and dates are starting points, not hard rules. A sale around the corner can still be a poor comparison, while an older sale may be useful if very little has sold nearby.

For renovations or a completed build, prepare approved plans where relevant, invoices, specifications, dated photographs and completion or occupancy evidence. Those documents can show that the property records have not been updated to include the work.

The amount spent is not automatically the amount added to market value. The Australian Property Institute's explanation of the valuation process makes clear that the final figure is a professional opinion based on verified facts, market transactions and judgement as at the valuation date.

Keep the request focused on the error and supporting evidence. Asking prices and broad agent commentary are weaker than settled comparable sales.

Consider another lender when its complete loan fits and a new valuation could address something the first method missed.

An upfront valuation may reveal a shortfall before a full application. It does not approve the loan.

Before ordering another valuation, I check 3 things:

If this is a refinance, compare the value against the current debt and proposed loan before assuming there is usable equity. The equity calculator can show the numbers, while the refinance guide covers costs and the complete refinance decision.

If several properties secure several loans, a low valuation on one property can affect the other loans too. Read the guide to cross-collateralised loans before assuming the equity in one home is separate and ready to use.

Another valuation can be the same or lower. The lender still needs to approve the complete application.

Ask whether a suitable lender can order a valuation before a full application, what it costs and when the result is expected. Access to the property, location and report type can affect timing. Confirm whether an enquiry will be recorded on your credit file before submitting multiple applications. Moneysmart explains what credit reports record.

If the property facts are right, the valuer has used defensible settled sales and the price sits above that evidence, another challenge may only consume time. The realistic options then become:

Use the review to decide whether the purchase or refinance still works. A well-supported lower value may be a reason to reconsider.

A pre-approval does not guarantee that the property will be accepted at the purchase price. If you bought at auction or signed without a finance condition, the valuation problem can become a contract problem very quickly.

Before bidding or signing, I calculate the loan against a lower value and keep the cash shortfall separate from stamp duty, legal costs and other purchase expenses. Once a contract is signed, confirm the finance and settlement dates with your solicitor or conveyancer. A broker can work on the valuation and loan. Only your legal adviser can explain the contract rights and consequences.

The seller accepted and the sale proceeded. That outcome depended on the seller agreeing to the revised terms. Ask your solicitor or conveyancer about your contract options and have them handle any changes; a low valuation does not itself give you the right to reduce the price.

You may need to reduce the loan or cover the difference from savings, a documented gift or accessible equity in another property. Confirm the lender accepts the source of funds and that any extra borrowing is affordable. A family guarantee is a separate commitment for the guarantor, not a way around every loan restriction. See Moneysmart's guarantor guidance.

An off-the-plan contract may be signed long before the lender assesses the completed property. By settlement, the market, final floor area, specification, lender policy and your financial position may all be different.

Current policies checked on 30 July 2026 show that several lenders distinguish between off-the-plan contracts signed more than 12 months before completion and newer contracts. That distinction can affect whether a current completed value or the lower of contract price and valuation is used, subject to the lender, product and completed property.

Check the current rule, arrange the required completion valuation and allow time for reassessment. An older contract or pre-approval does not guarantee extra equity at settlement.

Unregistered land creates another timing risk: title registration and infrastructure work can leave a long gap between signing and settlement. Check the finance and valuation again as settlement approaches. Our land home loan guide covers the separate land checks.

Client examples are based on real situations. Names and identifying details have been changed.