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Every caveat loan rests on one number: what the property is worth against what is already owed on it. The question is how precisely that number needs to be established, and the answer depends on how much margin there is.
Three levels of valuation
- Desktop. A valuer or an automated model estimates value from sales data without visiting. Fast and cheap, available within hours, and only suitable for standard property with plenty of comparable sales.
- Kerbside. A valuer views the property from the street and confirms it exists, is in the condition expected and matches the data. A day or two.
- Full. An internal inspection and a written report. Several business days in the cities, longer in regional areas, and the only option for commercial, industrial, rural, development or unusual property.
When a lighter valuation is enough
A $200,000 caveat loan behind a $600,000 mortgage on a $2 million suburban property has a combined LVR of 40%. Even if the estimate is 15% wrong, the loan is comfortably covered. That margin is what allows a lender to move on a desktop or kerbside figure. The same loan at 65% combined LVR has no such margin, and a full valuation is the norm.
When a full valuation is needed
Larger amounts, leverage near the ceiling, regional and rural property, vacant land, specialised commercial assets such as service stations or childcare centres, and anything with few comparable sales. Valuers for these can take a week or more, so the valuation, not the lender, sets the timeline. See caveat loans on rural property and on vacant land.
How to save time
Have a rates notice, a current mortgage statement and any recent valuation ready at enquiry. If a bank valued the property in the last few months, say so - some lenders will rely on it or have it re-addressed. Arrange access for the valuer immediately, because a tenant who cannot be reached for three days costs three days.
Value is not the asking price
Lenders work from a valuer’s figure, often on a shorter assumed selling period than a normal sale, which can sit below what an agent would quote. Build the loan amount around a conservative number and a low valuation will not derail the deal.
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Get matched with a funderFAQ
Can I use my own recent valuation?
Sometimes. A recent valuation by a recognised valuer, addressed or re-addressed to the lender, can be accepted and saves several days. A real estate agent's appraisal is useful context but is not a valuation.
Who pays for the valuation?
The borrower, and usually upfront because the valuer is paid whether or not the loan proceeds. Ask for the fee as a dollar figure before it is ordered.
What if the valuation comes in low?
The loan amount is reduced to fit the LVR, or additional security is offered. It is the most common reason a caveat loan settles for less than was asked for.