# What role does property appraisal play in my mortgage?

> Property appraisal accurately assesses the collateral value securing your mortgage.

Category: Renewal
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/renewal/what-role-does-property-appraisal-play-in-my-mortgage

## Answer
Consider this example scenario, comparing hypothetical property valuations under different appraisal approaches:

| Scenario                       | Property Value | Rationale                                                                   |
| ------------------------------ | -------------- | --------------------------------------------------------------------------- |
| Independent Appraisal          | $500,000       | Reflects current market conditions based on comparable sales.               |
| Inflated/Speculative Valuation | $550,000       | Includes anticipated but unrealized price appreciation.                     |

*The independent appraisal is a responsible valuation approach. The inflated valuation can result in the borrower owing more than the current property value if the real estate market corrects*

## Institutional highlights
- Lenders use different methods to determine your home's value, including appraisals and online tools.
- Lenders carefully check how they estimate property values to make sure they're accurate.
- Your lender has processes to manage the appraisal and value of your home as security for the mortgage.
- The assessed value of your home should reflect its true market price and use.
- If you have a smaller down payment, the lender will be extra careful about the home's valuation.
- Appraisals are done professionally by qualified, independent appraisers.

## Related guide
- https://ratellow.com/guides/variable-trigger-points

## Sources
- Property appraisals — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.4.2
- Footnotes — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/capital-adequacy-requirements-car-guideline-2026
- Debt service coverage — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#2.3.3