Valuing an Investment Property.

A property valuation is one of the most important — and least understood — parts of the home loan process. Whether you’re buying, refinancing, or accessing equity, the bank’s valuation often determines how much you can borrow, what interest rate you qualify for, and whether the deal works at all.

Valuations play an even bigger role in investment lending than they do for owner-occupied homes. A valuation doesn’t just determine whether a loan is approved — it influences borrowing capacity, usable equity, portfolio growth, interest rates, and how easily you can move on the next purchase.

For investors, valuations aren’t a one-off event. They’re something that comes up repeatedly: when buying, refinancing, accessing equity, or reviewing an existing portfolio. Understanding how banks value investment properties — and how to manage that process — is critical if you want your lending to remain flexible over time.

This is an area where broker experience adds significant value.

How investment property valuations differ from home valuations

On the surface, investment and owner-occupied valuations look similar. In practice, lenders often treat them differently because the risk profile is different.

When valuing an investment property, banks consider:

• Market value based on comparable sales
• Demand for the property type (house vs unit, regional vs metro)
• Market liquidity (how easily the property could be sold)
• In some cases, rental appeal and investor demand
• Broader exposure limits (postcode, unit density, property type)

Even when two properties are physically similar, a bank may assess them differently depending on whether they are owner-occupied or investment.

When investment property valuations are required

Valuations are typically required when:

• Purchasing an investment property
• Refinancing an investment loan
• Accessing equity for another purchase
• Reviewing rates or restructuring loans
• Consolidating or separating securities

Because valuations influence not just approval but future flexibility, timing and lender choice matter.

Valuation methods used for investment properties

Lenders generally use the same three valuation methods as for homes, but apply them more conservatively.

Desktop valuations

Desktop valuations are automated and rely on recent comparable sales and market data.

They are often used when:

• The property is standard and in a well-established area
• The loan-to-value ratio is conservative
• The lender is comfortable with the risk profile

However, desktop valuations can be conservative for:

• Units in large complexes
• Regional properties
• Properties with unique features or renovations

Kerbside valuations

Kerbside valuations involve an external inspection only.

These are commonly used when:

• A desktop valuation isn’t sufficient
• The lender wants more certainty without a full inspection
• The property is reasonably standard

Internal improvements may not be fully reflected, which can matter if the property has been upgraded.

Full internal inspections

Full valuations involve an internal and external inspection.

They are more common for:

• Higher loan amounts
• Higher LVR scenarios
• Unique or renovated properties
• Regional or rural-residential investments

While slower, they generally provide the most accurate picture of condition and appeal.

Why valuations can vary between lenders

A common frustration for investors is seeing different values come back for the same property. This happens because:

• Lenders use different valuation panels
• Lenders apply different risk settings
• Different valuation methods may be triggered
• Valuers interpret comparable sales differently

There is no single “correct” value — there is a range of acceptable values depending on lender appetite.

As brokers, we understand which lenders are more supportive for certain property types and which are more conservative.

Valuations and usable equity

For investors, valuation outcomes directly affect usable equity.

Usable equity is generally calculated based on:

• The bank’s valuation
• Lender LVR limits (commonly 80% without LMI)
• Existing loan balances
• Your borrowing capacity

A modest increase in valuation can:

• Create usable equity for another purchase
• Remove the need for LMI
• Improve interest rate pricing
• Strengthen servicing outcomes

Conversely, a conservative valuation can stall portfolio growth.

Managing valuations strategically as an investor

We don’t “chase” valuations, but we do manage the process strategically.

This includes:

• Selecting lenders whose valuation approach suits the property type
• Ordering valuations early to protect timeframes
• Providing relevant information where appropriate (renovations, improvements)
• Avoiding lender pathways known to be restrictive for certain assets

This is particularly important for:

• Unit portfolios
• Regional investments
• Mixed-use or non-standard properties

Common valuation issues for investors

Valuation comes in below expectations

This can limit:

• Purchase viability
• Equity access
• Refinance outcomes

Depending on the situation, options may include:

• Testing another lender
• Adjusting structure or leverage
• Deferring equity release
• Reviewing the broader portfolio strategy

Valuation delays impact settlement

Investment valuations can take longer, especially during busy periods.

We manage this risk by:

• Choosing lenders with reliable turnaround times
• Ordering valuations early
• Monitoring progress closely

Portfolio exposure limits

Some lenders limit exposure to certain postcodes, unit densities, or property types. Even with a strong valuation, policy can restrict lending.

This is why lender selection matters just as much as valuation outcome.

Valuations when refinancing investment loans

When refinancing, valuations become the foundation of the entire decision.

We assess:

• Whether a new valuation is likely to improve your position
• Whether your existing lender may offer repricing instead
• How valuation outcomes affect equity and future purchases

Sometimes staying put and restructuring makes more sense than switching lenders. A proper review looks at all options.

The Lumo approach to investment valuations

We treat valuations as a strategic tool, not a checkbox.

Our approach includes:

• Lender selection based on property type and portfolio goals
• Early and proactive valuation management
• Clear communication around risks and outcomes
• Portfolio-level thinking, not single-deal thinking

For investors, valuations don’t just support the current transaction — they shape what’s possible next.