Do I need to get a valuation and why?
A really common question I am asked is “why do I need to get a valuation if I’m borrowing over 80%?” The banks want to ensure that you have at least that 10% equity in the property. If for some reason you purchase over the value, and the valuation comes in at lower than the value that you purchased the property for, that means that you have less than 10% equity.
The bank is always conservative and they want to ensure that if, for some reason, you default on all of your mortgage repayments and it’s time to call for sale on your property to cover the costs of their financing. They want to make sure that they can actually sell your property and clear all of their costs.
This is where it’s really important for you to do the homework on the property that you are purchasing, and any comparative market analysis of sales in that area. You want to make sure that you are purchasing under the market value, or at market value, because if that valuation comes in at lower than you purchased the property for, you will be in a situation where you have to negotiate the price down. The banks will ever only loan up to 90% of the purchase price or the value, whatever is the lower of the two.
If you are looking to purchase a property at less than 20% equity, it is in your best interests to make sure you are working with a mortgage broker as we have access to all of the banks in New Zealand and we know exactly where to put your application.
If this is you, I would love to hear from you. Contact me today on 021 662 205 or email firstname.lastname@example.org