Factors affecting the value of your property

When applying for a new home loan your home loan lender will always ask for the estimated market value of your property. The lender will need to know this value in order to determine your Loan to Value ratio. When your Loan to Value (LVR) ratio is above 80%, your deposit amount is less than 20% of the value of the property and this elevated degree of risk propels the borrower to lend at a higher interest rate.

There are different factors that can affect the value of your property, and some factors that you take control of! By understanding these factors, you will be in a stronger position to understand how you can increase the value of your property and reduce your LVR and mortgage rate.

These are the most important factors that affect the value of your property:

1.       Condition:

The first factor affecting the property valuation is the current state of your property. If the property is aesthetically pleasing and built upon robust infrastructure, this is a good sign that the property is worth more. If some rooms require repainting, plumbing issues need to be addressed and door knobs are loose then these would negatively affect your valuation report.  Renovating some areas of the property and spending money to beautify the interior will increase the value of your property. Statistics show that even a garden that is maintained properly can increase the value of the property by 20%.

2.       Economic Factors

Market movements would also cause your property value to fluctuate. Interest rate movements and employment conditions affect repayment amounts and the affordability of property. For example, if employment rates are high, the capacity to borrow would be higher and this spike in demand would subsequently increase the value of properties.

3.       Location:

This is one of the most important external factors that dictate the value of your property. The quality of the public infrastructure and abundance of stores, schools and facilities would evidently affect how much your property is worth. The geographical location and what you view within close proximity of your property also plays a factor. The demographics of the location would also play an equally significant role, such as the prevalence of criminal activity.

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