Valued lower than you paid?
With a 20% deposit, the bank now lends you $760,000, not $800,000. You cover the $40,000 yourself, or borrow it and pay about $11,256 in mortgage insurance.
Enter the price you agreed, the bank’s valuation and your deposit.
A low valuation doesn’t cancel the contract by itself. Whether you can walk away depends on your state, how you bought and what your contract says. At auction you can’t: the contract is unconditional in every state.
| State | Cooling-off (private sale) | Cost to pull out | Finance clause |
|---|---|---|---|
| NSW | 5 business days | 0.25% of the price | Not usual |
| VIC | 3 business days | $100 or 0.2%, whichever is more | Only if you added one |
| QLD | 5 business days | 0.25% of the price | Usually included |
| SA | 2 business days | Up to $100 | Only if you added one |
| WA | None | — | Only if it’s in the contract |
| Auction, any state | None | — | None |
Rules as at October 2026. Check your own contract with your conveyancer or solicitor.
The bank lends on the lower figure. Say you planned to borrow 80% of a $1,000,000 price and the home is valued at $950,000. The bank will lend 80% of $950,000, which is $760,000, not $800,000. You then find the $40,000 difference yourself, borrow more and pay lenders mortgage insurance (LMI), challenge the valuation, or renegotiate the price if your contract still lets you.
Take the shortfall and multiply it by the share of the price you’re borrowing. A $50,000 shortfall on an 80% loan means $40,000. On a 90% loan it’s $45,000. That’s on top of your deposit, stamp duty and other buying costs.
If your loan ends up above 80% of the valuation, most lenders charge lenders mortgage insurance (LMI). On one lender’s published rates, an $800,000 loan at 84.2% costs about $11,256. A $900,000 loan at 94.7% costs about $41,427, against $22,644 at 90%. Most lenders let you add it to the loan. Most states also charge stamp duty on it, but NSW and the ACT don’t. Rates differ between lenders and insurers, so ask yours for a quote.
Yes. Ask your lender to look again and send it recent sales of similar homes nearby. Or apply with another lender, which will order its own valuation. If you pay for one yourself, a full inspection usually costs $300 to $600. The new number may come back the same.
It depends on your state and how you bought. At auction you can’t: the contract is unconditional everywhere. For a private sale, NSW gives you 5 business days to cool off (it costs 0.25% of the price), Victoria 3 business days ($100 or 0.2%, whichever is more) and Queensland 5 business days (0.25%). Most Queensland contracts also have a finance clause. South Australia gives you 2 business days. Western Australia has no cooling-off, so only a finance clause protects you. If you can’t settle, you can lose your deposit, so talk to your conveyancer or solicitor before any deadline.
Not necessarily. Valuers work from recent sales of similar homes and tend to be cautious, especially when prices are falling. Cotality’s index had Sydney values down 7.0% and Melbourne down 6.2% in the year to September 2026. A low valuation is worth weighing up, along with the recent sales you’ve seen yourself.
The bank values the finished home close to settlement, which can be years after you signed. If prices have dropped since, you have to cover the gap. If you can’t settle, you can lose the deposit you paid when you signed (usually 10%), and the developer can chase you for any loss if it resells for less. Choose Off the plan in the calculator to see what you’d need.
The 5% deposit under the First Home Guarantee is based on the property value your lender assesses, and that can be lower than the price you agreed. So a low valuation can mean you need a bigger deposit. Check with your lender or Housing Australia before you sign.