Process and paperwork
Appraisal
A lender-ordered opinion of a property's market value, used to confirm the loan-to-value ratio before funding.
An appraisal is how the lender checks that the property is worth what you're paying and that its security is adequate. An accredited appraiser does the work, and the lender is the client. You may pay for it, but the report belongs to the lender.
Mortgages are calculated on the lower of the purchase price and the appraised value. If a home sells for $520,000 and appraises at $500,000, the mortgage is sized against $500,000, and you'll need to cover the $20,000 gap in cash on possession day. It's one of the strongest reasons to keep a financing condition in your offer.
Many lenders now use automated valuation models on straightforward files, which removes the cost and the wait. On a straight switch at renewal, the appraisal is often waived completely. When one is needed, the new lender often pays for it to win your business.
Acreages, rural properties, unusual builds and homes with a suite are far more likely to need a full on-site appraisal.
Related terms
Loan-to-value (LTV)
The mortgage as a percentage of the property's value, which decides your insurance, your pricing tier and how much you can borrow.
Closing costs
The cash you need on possession day on top of the down payment, including legal fees, registration fees, adjustments, insurance and inspections.
Straight switch
Moving your mortgage to a new lender at renewal without changing the balance or the amortization, and since November 2024, without a stress test if it's uninsured.
This definition describes how the term is used in Canadian residential mortgage lending. It’s general information, not advice on your file. Rules, thresholds and rates change. Where a figure is quoted, it’s current as of the date shown on the related guide.
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