Key takeaways
- Bank valuations are deliberately conservative — they protect the lender, not your price.
- Lenders lend against the lower of price or valuation, so a low one raises your effective LVR.
- That can create a deposit shortfall or trigger LMI.
- Valuations vary between lenders — trying another is often the fastest fix.
Few moments in a purchase are as stomach-dropping as a valuation coming in under your agreed price. It can blow a hole in your deposit or tip you into LMI — but it’s far from the end of the road. Low valuations are common, they don’t always mean you overpaid, and there are several genuine ways to respond.
Why it happens
Bank valuations aren’t the same as a real-estate appraisal — they’re conservative estimates of what a property would reliably sell for, made to protect the lender. A low figure can reflect a fast-moving market where the price ran ahead of recent comparable sales, thin sales data in the area, unusual property features, or simply a cautious valuer on the day. It’s a risk assessment, not a verdict on your judgement.
What it does to your loan
Lenders lend against the lower of the price or the valuation. So if the valuation is under your price, your effective LVR rises — which can mean a bigger deposit is needed, or LMI is triggered where it wouldn’t have been. The gap becomes yours to bridge.
Illustrative example. Agree to pay $600,000 but have the property valued at $570,000, and a lender offering 80% will lend $456,000 (80% of the valuation), not $480,000. That’s $24,000 more you’d need to find. The exact impact depends on your deposit and the lender’s LVR.
The fastest fix is often simple: valuations vary between lenders, so ordering one through a different lender can produce a higher figure on the same property. A broker can run valuations across several lenders to find the most favourable — something you can’t easily do applying to one bank.
Your options
- Try another lender. A different valuer may land higher.
- Request a review. Provide evidence of genuine comparable sales.
- Renegotiate. A low valuation can be leverage to lower the price.
- Cover the gap. Extra deposit funds, or accepting LMI, to proceed.
This matters just as much when refinancing or releasing equity, where a low valuation limits how much you can access. Either way, don’t panic — assess the options before you act.
Broker Insight. A low valuation isn’t always the end — valuations vary between lenders. We can order them across several to find the one that values your property fairly, which often solves it quickly.
Valuation came in low? Let’s find a better one
We can order valuations across multiple lenders to find the one that values your property fairly — often solving the problem quickly. Free, no obligation.
Book your free game plan callFrequently asked questions
Why did my bank valuation come in lower than the purchase price?
Bank valuations are conservative by design — the valuer estimates what the property would reliably sell for, often erring on the cautious side to protect the lender. A low valuation can reflect a hot market where you paid above recent comparable sales, limited recent sales data, unique property features, or simply a cautious valuer. It doesn’t necessarily mean you overpaid, but it does affect how much the lender will lend.
What happens if the valuation is less than the price?
Because lenders lend against the lower of the price or valuation, a low valuation increases your effective loan-to-value ratio — which can mean a bigger deposit shortfall or triggering LMI. For example, the lender lends a percentage of the valuation, not the price, so you must cover the larger gap. You may need extra funds, a different lender, or to renegotiate the price.
Can I do anything about a low valuation?
Yes. Options include ordering a valuation with a different lender (valuations vary between lenders), providing evidence of comparable sales to support a review, renegotiating the purchase price with the seller, covering the gap with extra funds, or restructuring the loan. A broker can order valuations across multiple lenders to find the one that values the property most favourably — often the quickest fix.
This guide is general information only and does not take your personal circumstances into account. It is not financial or credit advice. Government schemes, lender policies, rates and tax rules change over time and eligibility criteria apply. Speak with us for advice tailored to your situation.