What Happens If Your Refinance Valuation Comes In Low?
The lender bases your loan on its valuation, not on your estimate. A lower figure means a higher loan-to-value ratio (LVR) for the same loan amount. The practical effects are:
- Less equity available to release than you planned.
- If the LVR goes above 80%, lenders mortgage insurance may apply (see refinancing with less than 20% equity).
- A less favourable interest rate tier, since many lenders price by LVR band.
- In some cases the application no longer fits that lender's policy at all.
None of this affects your existing loan. A low valuation for a refinance does not change what you owe or trigger anything with your current lender.
Why Is a Bank Valuation Lower Than Market Value?
A bank valuation answers a different question from an agent's appraisal. An agent estimates what a motivated buyer might pay in a good campaign. A valuer estimates what the lender could reliably recover, based on recent settled sales of comparable properties, and is professionally liable for the figure. Valuations therefore lean conservative, lag a rising market, and give little credit for features that do not show up in comparable sales.
The method matters too. Automated and desktop valuations rely on data and may miss a renovation or an unusually good position. A full inspection sees the property but can also notice defects.
I have ordered valuations on the same Sydney property with three lenders in the same week and had results more than $100,000 apart. Nobody was wrong; different valuers weighed different sales. This is why I order valuations before an application is lodged, usually with more than one lender at no cost to you, and then place the loan where both the value and the rate work.
What Can You Do About a Low Valuation?
1. Try a different lender
Each lender instructs its own panel valuer, and outcomes differ. Through a broker, upfront valuations can usually be ordered with several lenders before any application or credit enquiry, and often without charge.
2. Challenge the valuation with evidence
A valuation can be queried if there is evidence the valuer missed. That means recent settled sales of genuinely comparable properties nearby, ideally within the last three to six months, or factual errors such as the wrong number of bedrooms, land size or an unrecorded renovation. Opinions and asking prices do not move a valuer; settled sales sometimes do.
3. Reduce the loan amount
Borrowing a little less, or releasing less equity, can bring the LVR back under 80% or within the lender's limit.
4. Reprice with your current lender instead
A rate reduction on your existing loan needs no valuation. If the valuation blocks a refinance, a reprice can still deliver part of the saving. See repricing vs refinancing.
5. Wait and revalue
Valuations are typically valid for around 90 days. If comparable sales in your street are about to settle at stronger prices, a new valuation in a few months may read differently.
How Do You Prepare for a Refinance Valuation?
- Make access easy and present the property tidily for a full inspection.
- Give the valuer a short list of improvements with approximate dates and costs: kitchen, bathrooms, extensions, approved works.
- Have details of recent comparable sales you are aware of.
- Fix obvious minor defects beforehand.
Valuers form their own view, but they can only credit what they know about.
Do You Pay for a Refinance Valuation?
Often not. Many lenders cover the cost of a standard valuation for a refinance, and upfront valuations ordered through a broker are commonly free. Higher-value, rural or unusual properties may attract a fee. Costs are listed in refinance costs and fees in NSW.
Can You Use Your Own Valuation?
Generally no. Lenders rely only on valuations they have instructed through their own panel, addressed to them. A valuation you commission privately can be useful as evidence in a challenge but will not usually be accepted in place of the lender's.
General information only. It does not take your objectives, financial situation or needs into account. All lending is subject to lender assessment and approval. Fees and figures are typical ranges at 14 November 2026 and can change. Lend & Loan, Australian Credit Licence 511092.
