Mortgage Valuation Came in Low? Here's What to Do (2026)
It's one of the most stressful moments in a property purchase: the bank valuation comes back lower than what you've agreed to pay. Suddenly your loan approval is in jeopardy, you may need a bigger deposit, and the whole deal feels like it's falling apart.
## Why Valuations Come in Low
**Conservative methodology** - Bank valuers are assessing the property as loan security, not as your dream home. They're paid to be conservative.
**Comparable sales** - Valuers use recent sales of similar properties in the area. If you're buying in a rising market, the most recent comparable sales may lag behind current prices.
**Property-specific issues** - Non-compliant structures, unapproved additions, environmental risks (flood, bushfire), or unusual configurations can reduce a valuer's assessment.
**Conditional valuations** - Sometimes the valuation is at or near the purchase price but comes with conditions: "Subject to rectification of non-compliant deck structure" or "Subject to removal of unapproved garage." The bank may withhold funds until conditions are met.
## Understanding Your Valuation Report
**Assessed value** - The valuer's opinion of market value. This determines how much the bank will lend.
**LVR (Loan to Value Ratio)** - Your loan amount divided by the assessed value. Most banks lend up to 80% LVR without Lenders Mortgage Insurance (LMI). If the valuation drops, your effective LVR increases.
**Comparables** - The sales the valuer used to justify their assessment. Check these carefully - are they genuinely comparable in terms of size, location, condition, and features?
**Conditions** - Any requirements that must be met before the bank will release funds. These are non-negotiable.
## Your Options
**1. Challenge the valuation** - You can request a review if you believe the comparables are inappropriate or the valuer missed key features. Provide evidence of more recent or more comparable sales. Some lenders allow a second valuation (at your cost, $300–$600).
**2. Increase your deposit** - If the valuation is $20,000 below purchase price and you're at 80% LVR, you need an extra $20,000 in deposit to make up the shortfall. Plus potential LMI if you go above 80% LVR.
**3. Renegotiate the purchase price** - Use the valuation as evidence that you're overpaying. The seller may not agree, but it's a legitimate negotiation tool.
**4. Try a different lender** - Different banks use different valuers and have different risk appetites. A second lender may produce a higher valuation.
**5. Walk away** - If you have a finance clause in your contract and the valuation doesn't support your loan, you can exercise the clause and exit the contract.
## Conditional Valuations
If the valuation includes conditions, understand what they mean:
- **"Subject to council approval"** - Unapproved structures need a Building Certificate or DA. Cost: $500–$10,000 depending on the work.
- **"Subject to rectification"** - Something needs to be fixed before the bank is comfortable. Get quotes for the specific work.
- **"Subject to flood/bushfire report"** - The bank wants specialist assessment of environmental risk. Cost: $300–$800.
## Upload Your Valuation Report
Upload your mortgage valuation to ReportWise for a plain-English explanation of the assessed value, any conditions, comparable sales analysis, and what it means for your loan approval.