When you get a new mortgage, an appraisal of the subject property is often required by your lender. An appraisal is an unbiased determination by an accredited appraiser of the estimate of the current fair market value of the property. The appraiser provides the lender with a written opinion of the property’s value, and is client-paid for most refinances, switches, conventional mortgages and only in exceptional situations, high-ratio mortgages.
Appraisals are required for refinances because you can only refinance up to 80% of your home’s appraised value, and for some purchases and switches because the property becomes the lender’s security. Keep in mind that when a realtor gives you an evaluation of a property’s value, that should not be considered an appraisal for financing purposes. And given the housing market in some parts of Canada are seeing multiple offers, some buyers are paying well over asking and the appraiser may determine that the property has a lower value, which could affect the buyer’s financing. As always, please get in touch with the experts at MiMortgage.ca at any time if you have any questions. We’re here to help!