The appraisal will typically be done once the lender has already approved your income, and just needs to approve the property itself. If required, an appraisal is typically ordered once your offer to purchase has been accepted.Īn appraisal is typically included as a part of your financing clause, so you should insist that your lender performs the appraisal during the subject removal period. How the Appraisal for Mortgage Process Works It is common for the Big 5 banks in Canada to pay for the appraisal, and some mortgage brokers may also cover this bill as a part of their service. However, this depends on whom the buyer is using for their mortgage. Who pays for the mortgage appraisal & how much is it?Īn appraisal is hired by the lender, but typically paid by the buyer. However, when the value of the property is in question and the lender has reason to question the purchase price with relation to the actual value then an appraisal will likely be required. This is often the case when your down payment exceeds your loan amount, or for buyers that are already insured by CMHC. When is an appraisal required?Īn appraisal is typically required for purchasers that are low-ratio that have uninsured mortgages, or in other words, putting 20% or more down payment towards their home purchase.Īnother common question is when is an appraisal not required. Therefore, appraisals are conducted to protect the lenders in their loan investment to you, and the goal is to justify the amount that the purchaser has paid for the property. If the appraisal does come in low, then lenders will only lend on the appraised value and not the full purchase price. You may wonder, why do lenders want an appraisal? From the investors view, if the market value is lower than the agreed upon sales price and the buyer defaults on the mortgage, then the lender may have issues selling the property for enough money to recover their investment. Lenders order them to ensure that the home is worth what you are paying for it, within reason. An appraisal is an unbiased estimate of the value of a home that is conducted by a third party appraiser.
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