With an equity mortgage, the appraisal is one of the most important steps. The appraised value sets how much equity the lender will count, and therefore how much you can borrow. Here’s how appraisals work and how to prepare.
What an appraisal is
An appraisal is an independent opinion of your home’s market value, prepared by a qualified appraiser for the lender. It’s different from your property tax assessment and from online estimates. See assessed vs market vs appraised value.
What appraisers look at
- Recent comparable sales of similar homes nearby, which is usually the biggest factor
- Size, layout and lot
- Age and condition, including roof, windows, furnace and foundation
- Updates and renovations, especially kitchens and bathrooms
- Location, including street, neighbourhood and nearby amenities
- Anything unusual, such as a secondary suite, large outbuilding or non-standard construction
Why values sometimes come in low
- Few recent comparable sales, which is common in rural areas
- Market changes since the sales used
- Renovations that cost more than they add in value
- Visible repairs needed
- The appraiser couldn’t access part of the home
How to prepare
- Tidy up and make every room accessible, including the attic hatch, furnace room and garage.
- List upgrades with approximate dates and costs.
- Fix small, visible issues like leaky taps, missing trim and burnt-out bulbs.
- Share relevant information, such as a recent nearby sale you think is comparable.
- Be home or reachable in case the appraiser has questions.
Who pays, and who chooses the appraiser
You usually pay for the appraisal, but the lender orders it or approves the appraiser, so it’s independent. Some lenders won’t accept an appraisal ordered for a different lender. Ask your broker before paying for one.
If the value is lower than expected
Your options include borrowing less, adding another source of funds, or trying a lender with different property policies. A broker can help you decide. See how much equity you need.
This article is general information, not financial or legal advice. Lender requirements, rates and fees change and depend on your situation.