Will bank use valuation rather than purchase price for LVR

[Pelv]

Hi, had to get a valuation done to get finance approved. It came on $20k above purchase price. Settlement is still 3 months away. Will they use the valuation for LVR calculation or purchase price? The extra 20k would put us under 80% and allow us to get a better rate.

Cheers

[Bobsyouruncle]

Short answer is no. But given the lengthy settlement it may be worth asking.

[Anthonyacat]

Ask the bank! But I'd imagine Bob's correct.

If the extra $20k is enough to make a material difference to your LVR, just save hard for the next three months and pull together another $4-5k

Heck, if that's not possible, take out a short term loan from somewhere else for $10k! Do whatever you can to borrow only 79.9% from the bank.

[Pelv]

I thought that might be the case.

Would taking out a short term loan from elsewhere not affect my bank approval?

[Pelv]

Spoke to my broker his advice is to fix for six months then get another valuation then the bank will use that for LVR.

Why is a valuation in 6 months acceptable not not at the time of purchase? madness!

[brokerman]

Spoke to my broker his advice is to fix for six months then get another valuation then the bank will use that for LVR.

Why is a valuation in 6 months acceptable not not at the time of purchase? madness!

Banks go off of purchase price or RV whichever is the lower. The reason is simply the purchase is deemed to be market value (willing buyer willing vendor)

In 6 months time it becomes a refinance/top up and so the bank goes off the then RV. RV's have a shelf life of 3 months as a rule.

[Pelv]

Thanks for the info

[Anthonyacat]

Would taking out a short term loan from elsewhere not affect my bank approval?

Possibly. Depends how marginal your loan is.