Why a property value calculator will be your best friend when buying a new house

What is a property valuation?

A property valuation provides an estimate of the value of your home based on the current market conditions. Property valuations are completed by Certified Practising Valuers (CPVs), who are university-qualified to perform a valuation of a property. Once they’ve completed the valuation, the CPV will provide a legally binding report detailing the property’s market value.

Property valuations are used by banks to determine the loan to value ratio (LVR), which helps them to work out how much they can comfortably lend a potential borrower. Determining the LVR also helps banks and lenders to work out your equity position. If your deposit is less than 20% of the value of the home or you have less than 20% equity in your home when refinancing, you might need to pay lender’s mortgage insurance (LMI).

How does a property market value calculator work?

Engaging a professional property valuer doesn’t come cheap, but an online property value calculator can make for a quick, easy and affordable alternative.

Rather than giving you a detailed and legally-binding report like a CPV, an online valuation calculator provides a quick overview of your property’s value. Online property value calculators use computer-driven algorithms and numerous data points to generate a value estimate of your property.

While each calculator is different, they’ll often consider information like:

• The property type (i.e. free-standing house, townhouse, apartment, etc.)
• Property characteristics (i.e. number of bedrooms, bathrooms, living areas, garages, etc.)
• Block size and location
• Recent comparable sales in the local area
• Current and historical market trends

5 benefits of using an online property value calculator

An online property value calculator can be super useful when it comes to buying a new house, but they can also provide a range of benefits for existing homeowners too.

1. Determines the estimated property value

Perhaps the most obvious benefit of using an online property value calculator is to get a better understanding of what the property is worth under the current market conditions. Some property valuation calculators also provide additional information on the property, like the property features, it’s sales history and it’s proximity to different amenities in the area. Not to mention, an online calculator can be a helpful educational tool for potential home buyers who want to understand the different factors that influence the value of a property.

2. Boosts your negotiating power

For potential buyers, these tools can provide insight into whether a property is priced fairly or overvalued. If the calculator suggests the property is overpriced, you might be able to use this information as leverage to negotiate a lower purchase price. On the other hand, if the calculator indicates that the property is under-priced, it may motivate you to act quickly and secure the property before other buyers catch on.

As the saying goes, ‘knowledge is power’, and this definitely rings true when it comes to buying a house. Having a property value estimate can give you a boost in confidence during negotiations. It demonstrates that you've done your homework and you’re not making uneducated decisions.

3. Provides a base for comparison

Completing an online valuation helps you to compare how the property’s value stacks up to similar properties in the area. Some online calculators will even provide you with information about recent listings and sales of similar properties in the surrounding area. If you’re interested in purchasing a property as an investment, you might even be able to source rental information that can help to inform your decision-making.

4. Quick, inexpensive, and convenient

What’s not to love about a property valuation that you can complete from the comfort of your own home? Online property value calculators provide quick estimates of a property's value without the need for a site visit or a professional valuation. This level of convenience can be especially useful when you're just looking for a rough estimate. Plus, many online property value calculators are free to use, which can save you money on engaging a CPV when you’re still in the early stages of your house hunt.

5. Work out your LVR

Another benefit of using an online property value calculator is getting a better understanding of where you stand with the bank. Having a rough estimate of a property means you can calculate the LVR to work out whether or not you’ll be up for LMI. It can also help you to figure out your potential mortgage repayments. With that said, if you do decide to go ahead with the purchase, it’s entirely possible that the bank will complete its own property valuation that could produce a figure that’s different from the one generated online.

While there are plenty of benefits to using an online property value calculator, they’re no substitute for a professional valuation. Although using an online calculator is a great way to educate yourself during the early stages of the home-buying process, many banks and lenders still require a professional property valuation to be conducted during the home loan application process.

At Unloan, we use an automated property valuation to digitally assess your property's value using CommBank's industry-leading automated valuation technology. Have a read of our blog to learn more about our application process or jump online to have a look at our eligibility requirements.

This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍

Unloan is a division of Commonwealth Bank of Australia.

Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).

Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.

*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.