Bank valuation

Discussion in 'Loans & Mortgage Brokers' started by blackberry88, 12th May, 2021.

Join Australia's most dynamic and respected property investment community
  1. blackberry88

    blackberry88 Member

    Joined:
    22nd Oct, 2020
    Posts:
    14
    Location:
    Aus
    Hi Expert,

    I am currently owning 1 IP and would like to use the equity for the new IP. The bank recently did the Desktop valuation and the value come back significantly lower than Core Logic data and recent sale in the same suburb. I would like to know if I should go for a full valuation?

    The estimated value is 800-850k but the bank come back with 760k. I can still buy the new IP with the bank valuation but it won't be enough for future IP purchase.

    Thanks for your help.
     
  2. Mick Butterfield

    Mick Butterfield Well-Known Member

    Joined:
    15th Jan, 2016
    Posts:
    739
    Location:
    Bermagui NSW
    Have you asked them for an equity release as yet? Do you have more than 20% equity in the property?
     
  3. blackberry88

    blackberry88 Member

    Joined:
    22nd Oct, 2020
    Posts:
    14
    Location:
    Aus
    Thanks for the reply Mick.
    I am currently owing $215k for this IP but I have already borrowed $132 for my PPOR. Assume if I can get the estimated price of $825k, my equity balance would be $312k. I am just unsure if I should get the maximum equity now or get another valuation when I am ready to purchase new IP again.
     
  4. Mick Butterfield

    Mick Butterfield Well-Known Member

    Joined:
    15th Jan, 2016
    Posts:
    739
    Location:
    Bermagui NSW
    It can't hurt to have it there released (if you can be trusted not to go crazy on a new car etc.) You can always re finance again when/if the need arises. It does sound to me though that you should look at a restructure to pay down the PPOR to maximise your tax efficiency.
     
    blackberry88 likes this.
  5. blackberry88

    blackberry88 Member

    Joined:
    22nd Oct, 2020
    Posts:
    14
    Location:
    Aus
    Thanks for the suggestion.
    I will definitely looking at restructure.
    Cheers
     
  6. Stoffo

    Stoffo Well-Known Member

    Joined:
    14th Jul, 2016
    Posts:
    5,301
    Location:
    In the Tweed
    Core logic o_O
    So an algorithm largely based on number of bedrooms & bathrooms that tallies up recent sales to give you an overinflated price (in the hope that you might sell, generating more income for that sector) because it can't decipher if you have a development block, a near new house or a dump.....
    You can't base anything on those sites.
    Bank valuation is probably under, but not by much (even in current market)

    It's fine to have equity, but servicability for another purchase may be the issue ?
     
    Beano and Lindsay_W like this.
  7. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

    Joined:
    23rd Aug, 2015
    Posts:
    1,546
    Location:
    Bella Vista
    Corelogic algorithm is more like a guestimate.

    Just get an upfront valuation, or even order a few valuations to see which one comes back the highest.

    As long as it won't upset your tenants.
     
  8. blackberry88

    blackberry88 Member

    Joined:
    22nd Oct, 2020
    Posts:
    14
    Location:
    Aus
    Thanks Stoffo! Is serviceability only based on salary income and expenses?
     
  9. blackberry88

    blackberry88 Member

    Joined:
    22nd Oct, 2020
    Posts:
    14
    Location:
    Aus
    Thanks again Tony. What is the best way to estimate the property price before put the offer in?
     
  10. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

    Joined:
    23rd Aug, 2015
    Posts:
    1,546
    Location:
    Bella Vista
    Thats a little hard, best to do comparable sales via Rp Data or REA
     
    blackberry88 likes this.
  11. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    4,982
    Location:
    QLD/Australia Wide
    Get a decent Mortgage broker on your side asap, one that has access to RP data and other lender Desktop/Automated valuations