# What's the Impact of Property Valuation on Borrowing?

> Property valuation is the cornerstone of mortgage lending.

Category: Refinance
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/refinance/whats-the-impact-of-property-valuation-on-borrowing

## Answer
Property valuation is the cornerstone of mortgage lending. It has a direct impact on how much you can borrow and the terms you'll get. Financial institutions (FRFIs) rely on transparent valuation policies, using inspections, appraisals, and automated tools to assess your property's value. Remember, a realistic valuation, that mirrors current market prices, is essential for sustainable borrowing. Check the example:

## Institutional highlights
- Lenders use different ways to figure out your home's value, like sending someone to inspect it or using online tools.
- The way your home is valued depends on how risky the loan is, considering things like how much you're borrowing and the current market.
- Lenders need to carefully check how they estimate your home's value.
- If you're borrowing a large amount compared to your home's value, or if the market is unstable, a thorough valuation is especially important.
- It's important to have realistic and well-documented valuations to support your borrowing.

## Related guide
- https://ratellow.com/guides/heloc-vs-second-mortgage

## Sources
- LTV Ratio and Loan Type — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017
- Mortgage insurance — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.5.1
- 4.1.11 Exposures secured by residential real estate — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/capital-adequacy-requirements-car-guideline-2026