INTEREST rates are tantalisingly low and banks are out to entice borrowers with more competitive mortgage deals. But for many homeowners, the opportunity to refinance can be scuttled by an appraisal.
Consumer frugality sparked by the GFC and improved banking competition have pushed the number of refinanced properties to a 20-year high. More than a third of all home loans in Australia last year were refinanced mortgages, according to mortgage comparison site RateCity.
Refinancing can wipe thousands of dollars off your mortgage and an appraisal is the first step to securing a better mortgage deal.
But with falling property values – by more than 30 per cent in some parts of Australia – many homeowners may be surprised to find their home isn’t worth as much as they believed. The potential discrepancy is important because borrowers must have a certain level of equity to qualify for a refinancing.
Banks say that borrowers with 20 per cent or more equity in their homes are most likely to be accepted for refinancing by banks. A low appraisal reduces that level of equity and can shut the door on refinancing your loan.
The appraiser, who will be hired through your mortgage lender, will schedule a visit to your home as part of the process. Before the appointment, here are some tips on how you can enhance the value of your home.
Highlight the home’s best features
Make a list of any features you think enhance the value of your home and point them out in a walk-through with the appraiser. If there is a feature in your home that is special, point it out. Keep the door open to a phenomenal closet before the appraiser arrives.
Don’t forget the back yard
Appraisers can hack off hundreds, even thousands, of dollars from your home’s value just for having a messy yard.
You don’t have to redo the entire kitchen or bathroom. Adding fresh paint or tiles can be considered an update and add value.
Clutter isn’t just an eyesore; it costs money too. Experts say a clean, clutter-free house can appraise 10 per cent higher than the exact same messy home.
Out with the old
Even an old TV or lounge can make an entire room look dated.
The naked truth
Carpet on top of carpet will read like there’s a stain. You don’t want to give the appraiser the impression that you’re hiding something.
Remove excess furniture
Maximise your space and how it’s perceived. The less furniture you have in a room, the larger the space looks.
Everything in your home should work
If something doesn’t work properly, replace it, fix it or remove it. When people come to see your home – buyers and appraisers – it can be hands on. If there is a knob that is broken or loose, fix it.