Do You Always Need a Valuation to Refinance?

If you’re refinancing your home loan, chances are a valuation will be part of the process, especially if you’re switching lenders. The bank needs to know what your property is worth today so they can calculate your Loan-to-Value Ratio (LVR) and assess the risk of the new loan.

But not every refinance triggers a full inspection. Some are fast, automated, and cost you nothing. It all depends on your situation and the lender’s policy.

Let’s walk through when valuations are needed, what they involve, and how they might affect your plans.

Why Valuations Happen When You Refinance

Refinancing means replacing your current loan with a new one. The lender you’re moving to needs to confirm that your home is still suitable security for the loan amount you’re asking for.

Your property might have gone up – or down – in value since you bought it. A valuation gives the lender an up-to-date figure so they can calculate your current equity and LVR. That determines your borrowing capacity, and whether you’ll need to pay Lenders Mortgage Insurance (LMI).

Most of the time, it’s just part of the process, and often, you won’t need to do anything. The lender arranges it behind the scenes.

What Type of Valuation Is It?

Lenders use different types of valuations depending on the risk profile of the loan:

1. Automated Valuation Model (AVM):
   A computer algorithm uses recent sales data to estimate the value. These are fast and usually free. You might not even know one was done.
2. Desktop or Drive-By Valuation:
   A valuer checks online records or drives past your property to verify its condition.
3. Full Valuation:
   A licensed valuer visits your property in person and does a detailed report. This is more common with high loan amounts, complex properties or higher LVRs.

The lender chooses which method to use. You typically don’t get to pick.

Do You Have to Pay for It?

Often not. Many lenders cover one standard valuation as part of a refinance. If a full valuation is needed, the cost can be around $200–$400, but it’s often absorbed by the bank, especially with major lenders or broker-arranged loans.

You’ll usually only pay if:

• The valuation falls outside standard scope (e.g. rural or prestige property)
• You request multiple refinances or valuations across several properties
• A second valuation is required due to a dispute

Best approach? Ask upfront. Most of the time, it’s included, or the broker will let you know before anything is locked in.

When a Valuation Might Not Be Required

There are a few exceptions where refinancing doesn’t involve a new valuation:

1. Internal refinance or repricing:
   If you’re staying with your current lender and switching loan products or negotiating a better rate, there’s often no valuation—because the loan is staying put.
2. Low-risk loan (low LVR):
   If your existing loan is very small compared to the property value, some lenders will waive the valuation step or use an AVM quietly in the background.
3. Fast refinance programs:
   Some banks use AVMs or skip formal valuations for high-quality borrowers refinancing standard properties with lots of equity.

But if you’re switching lenders, it’s safest to assume a valuation will be done in some form.

What Happens if the Valuation Comes In Low?

Sometimes, the valuation is lower than you expected. That can:

• Increase your LVR (potentially tipping you into LMI territory)
• Reduce your borrowing power
• Limit your ability to draw out equity

If that happens, you can ask the lender to review it, provide recent comparable sales, or try a different lender (some use different valuers who may assess differently).

But valuations are usually conservative. It’s worth checking recent local sales before applying, so you’re not caught off guard.

The Bottom Line

Yes, a valuation is usually part of refinancing, but most of the time, it’s quick, straightforward and handled by the lender.

It helps protect everyone involved and ensures your new loan is based on up-to-date figures. In many cases, you won’t need to do anything beyond opening the door (if a full inspection is needed), and you may not pay a cent.

If you’re refinancing and wondering what to expect, we’re happy to talk you through the process, including whether a valuation will apply and how to prepare.

Refinancing doesn’t have to be hard. A good broker makes it simple, and knowing what to expect helps you plan with confidence.