What appraised value means in Canadian mortgage lending and how it can differ from purchase price, market value, or assessed value.
Appraised value is the value conclusion reached in an appraisal for the property under review. In mortgage lending, it is the number the lender relies on when evaluating the property as security.
Borrowers may be able to support the mortgage personally, but the lender still needs the property value to support the loan. If the appraised value is lower than expected, the financing plan may need to change.
The appraised value is the result of the appraisal, not just the buyer’s opinion or the seller’s asking price. It may be influenced by comparable sales, property condition, and local market context.
Lenders often treat the lower of purchase price and appraised value as the basis for certain loan-to-value decisions. That is why the appraisal outcome can affect down payment needs even when the contract price is already signed.
If a home is under contract for $900,000 but the lender’s appraisal supports only $875,000, the borrower may need to bring more cash to close or renegotiate the deal if financing no longer fits.
Appraised value is not automatically equal to market value in the way consumers use that phrase casually, and it is definitely not the same as assessed value for tax purposes.
Borrowers also sometimes assume a previous appraisal controls forever. Lenders may require a new appraisal when the transaction or timing changes.
Appraised value depends on the valuation date, property condition, lender instructions, and available market evidence. Different appraisers can still reach somewhat different supported values.