Appraisal for a refinance: how to prepare, and what to do if it comes in low
When you refinance, the appraised value decides how much equity you can access, not your own estimate or your property tax assessment. Here's how a refinance appraisal works in Canada, what the appraiser looks at, how to prepare and what to do if the number comes in lower than you hoped.
An appraisal for a refinance is an independent opinion of your home's market value that your lender uses to decide how much you can borrow. FCAC describes home equity as the difference between your home's appraised value and what you owe, and you can usually borrow up to 80% of that appraised value when you refinance. The Appraisal Institute of Canada says residential appraisals mainly rely on the direct comparison approach, comparing your home with recent similar sales. You may pay the appraisal fee, and some lenders cover it. In our example, a value $40,000 lower than expected cuts available equity from $120,000 to $88,000 on a $520,000 balance.
Key takeaways
- →The appraisal sets your borrowing limit. You can usually refinance up to 80% of your home's appraised value, per FCAC.
- →Comparable sales drive the number. The Appraisal Institute of Canada says appraisers analyze recent sales of similar properties and adjust for differences.
- →Preparation helps the appraiser see your home accurately: a list of upgrades with dates, easy access and a tidy, well-maintained home.
- →A low value isn't the end. You can borrow less, ask the lender to review new comparables or compare lenders.
- →Ask who pays. FCAC lists appraisal fees among refinance costs; some lenders cover them.
Short answer: An appraisal for a refinance is an independent estimate of your home's market value, ordered by your lender to decide how much you can borrow. FCAC defines home equity as the difference between your home's appraised value and what you owe on it, and notes you may need an appraisal to determine that value [1]. When you refinance, you can usually borrow up to 80% of the appraised value [1]. So the appraisal, not your own estimate or your property tax assessment, sets the ceiling.
This guide explains how a refinance appraisal works, what the appraiser looks at, how to prepare and what to do if the value comes in low. If you're refinancing to access equity, our home equity takeout page shows how we compare options.
How a refinance appraisal works
- The lender orders it. In our experience, the lender chooses or approves the appraiser, who reports to the lender.
- The appraiser inspects the home, inside and out, noting size, layout, condition and upgrades. For some files, lenders may accept a desktop or automated valuation instead, in our experience.
- The appraiser analyzes the market. The Appraisal Institute of Canada (AIC) says the direct comparison approach analyzes completed sales, listings or pending sales of similar properties [2]. The cost approach is more reliable for newer homes; the income approach is typically not used for residential property [2].
- The report goes to the lender, usually on a standard form report for a residential property [2].
What an appraiser looks at
| Factor | Why it matters |
|---|---|
| Recent comparable sales | The main benchmark for most homes [2] |
| Location and lot | Street, neighbourhood and lot size can shift value |
| Size and layout | Above-grade living space, bedrooms and bathrooms |
| Condition and age | Wear and tear reduce value, especially in the cost approach [2] |
| Upgrades | In our experience, kitchens, bathrooms, roofs, windows and mechanicals get noticed when they're documented |
| Market direction | Prices in your area over recent months |
Planning a refinance? A licensed 8Twelve agent can estimate a realistic value range before the appraisal is ordered and compare lenders that fit, across 65+ lenders, OAC. See your equity options
What a lower value means: a worked example
You owe $520,000 and expected your home to appraise at $800,000. It comes in at $760,000.
| Appraised value | 80% limit | Minus your $520,000 balance | Available to borrow |
|---|---|---|---|
| $800,000 (expected) | $640,000 | $520,000 | $120,000 |
| $760,000 (appraised) | $608,000 | $520,000 | $88,000 |
Figures are assumptions for illustration, not offers. Uses the 80% refinance limit [1]; lenders may lend less.
What it shows: a value 5% lower than expected cut the equity you can access by about 27%, because the drop comes entirely out of your available room. That's why a realistic estimate before you apply matters. Our guide to home equity takeout in Canada shows other ways to borrow against the same equity.
How to prepare for the appraisal
- List upgrades with dates and costs: roof, windows, furnace, kitchen, bathrooms, basement finishing.
- Have permits on hand for major work, such as a legal secondary suite.
- Fix small, visible issues: dripping taps, missing trim, burned-out bulbs.
- Make every area accessible, including the furnace room, attic hatch and garage.
- Share recent nearby sales you know of with your broker, so they can be passed to the lender if relevant.
You can't pressure an appraiser, and you shouldn't try. Your job is to make sure nothing gets missed.
If the appraisal comes in low
In our experience, you have a few options:
- Borrow less and cover the gap another way.
- Ask the lender to review it if you have comparable sales the appraiser didn't consider. The lender decides whether to act on it.
- Compare lenders. A different lender may order its own appraisal, which costs another fee and may not change the answer.
- Consider another structure, such as a HELOC or a second mortgage, if it suits the purpose. Our HELOC vs refinance guide compares costs.
- Wait, if you don't need the money now.
What the appraisal costs
FCAC lists appraisal fees among the costs of borrowing against home equity, along with title search, title insurance and legal fees [1]. When switching lenders, FCAC suggests asking the new lender whether it will pay some or all of your costs, including an appraisal if one is needed [3]. In our experience, a standard appraisal costs a few hundred dollars, more for large, unique or rural properties, and some lenders cover it as part of their offer. Our guide to refinance costs in Canada puts it alongside the other costs.
From our desk: the refinances that run into trouble at appraisal are usually the ones planned around an optimistic number from a neighbour's sale or an online estimate. We'd rather start with a conservative value and be pleasantly surprised.
The appraisal decides how much equity you can access when you refinance. Start with a realistic value, document your upgrades and have a plan B if the number comes in low.
Next step: check the rules in mortgage refinance requirements in Canada, or run payments with our mortgage payment calculator.
This article is for general information only and isn't financial, legal or tax advice. Rates, products and terms change without notice and are available on approved credit (OAC). The rate and terms you qualify for depend on your individual financial situation, including credit, income, property and loan-to-value. "Best rates" means the most suitable options available for your situation, not a guarantee of the lowest rate. Example rates and payments are for illustration only, as of October 2026, and are not an offer. 8Twelve Mortgage arranges mortgages through 65+ lenders and does not lend directly. Licensed across Canada — see our licences.
Examples are for illustration only, as of November 1, 2026, and are not offers or valuations. Appraisal practices, fees and lending limits vary by lender and property; approval is OAC. Rules checked against FCAC and the Appraisal Institute of Canada on November 1, 2026. 8Twelve does not lend or fund mortgages; we arrange them with third-party lenders.
Frequently asked questions
Sources
- Borrowing against home equity - FCAC
- What appraisers do (methodologies and report types) - Appraisal Institute of Canada
- Renewing your mortgage (costs to change lenders) - FCAC
Last reviewed on November 4, 2026