Property valuation for a mortgage

When your bid is accepted, it is time to fix everything to finalise the buying process. Then it is time to arrange the mortgage. To take out (and refinance) your mortgage, you need a valuation report. For this, you need to have a house valuation carried out for your house. Why do you need a property valuation for a mortgage and how does it work?

What is a property valuation?

Once you have bought the house and the preliminary sales contract has been signed, you will have the house valued. In a home appraisal, an appraiser accurately estimates the house value, based on the house itself and the local housing market. An appraiser substantiates this home valuation value in an appraisal report, which you send to your mortgage lender.

Property valuation for a mortgage

You need this appraisal report to take out or transfer your mortgage. This is because your house serves as collateral for the mortgage loan. As a result, your maximum mortgage is also linked to the property value of the house. And since you are only allowed to borrow 100% of the home value since 2018, the appraisal value directly affects the mortgage amount.

Valuation value vs. purchase price

The bank calculates your maximum mortgage using with the appraised house value as well as the purchase price, whichever is lowest. If your purchase price is lower than the appraised value, there is no problem. Your maximum mortgage is then equal to the purchase price.

Valuation lower than purchase price

But it also happens that the house appraisal value is lower than the purchase price you paid. For instance, because you had to outbid the owner to buy your dream house. Then your maximum mortgage is equal to the appraised value. So you cannot borrow the difference between appraisal value and purchase price and have to pay it with your own money. If you do not have sufficient savings (or excess value), you will not be able to finance the house.

Property valuation and own money calculation example

How much can you borrow for your mortgage? We will explain this with an example calculation.

Appraised value higher than purchase price

You buy a house for € 250.000
The appraised house value is € 260.000
Your maximum mortgage is € 250.000

Purchase price higher than appraised value

You buy a house for € 250.000
The appraised house value is € 240.000
Your maximum mortgage is € 240.000
You cannot borrow the difference of € 10.000
You have to pay € 10.000 of your own money

But beware: you always need your own money to buy a house, even if your appraised house value is higher than the purchase price. Because the buyer’s costs and other additional costs of buying a house cannot be financed with your mortgage anyway.

Appraisal and house value

An appraisal house value that is a lot lower than the purchase price, so you don’t want that. You would rather not put in any extra money of your own to buy your house. That is why it is important to find out how much the house value is before you start bidding on a house. Fortunately, there are several ways to calculate the house value.

Cost of house appraisal

So a home valuation is compulsory, but you have to pay for it in the Netherlands. That makes a valuation 1 of the compulsory buyer’s costs when you buy a house. The NWWI appraisal costs vary per appraiser. These prices vary everywhere in The Netherlands from € 450 up to € 950. Fortunately, the valuation costs are tax deductible from your income tax return. That makes a difference.

Choosing an appraiser

A home valuation is often carried out by an estate agent, but not the selling or buying agent of the house. These are not objective. Your purchase broker (or mortgage adviser) can often advise you a good valuer.
Would you rather choose a valuer yourself? You can do so, for example, via Advieskeuze or Taxatietarieven, independent comparison sites for valuers.
NWWI valuation
Make sure your appraisal home is carried out by an appraiser affiliated with NWWI. A home valuation report with the NWWI seal of approval is accepted by all mortgage providers and is mandatory if you want to take out an NHG mortgage.

Property valuation and outbidding

So, now you know exactly how it works, having your house valued. And that you should do the home valuation before you make an offer on a house. So that you don’t get into a jam with your own money.
Need to overbid? Then get your house valued urgently, before the legal cooling-off period of the purchase contract has expired. Then you won’t have to buy the house if the property value is lower than you thought. Do you have questions about your home appraisal value? Talk to our mortgage advisers. They will be happy to help you further.

Compare appraisers here