Appraisal Fees When Refinancing Your Mortgage in Canada

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Appraisal Fees When Refinancing Your Mortgage

When refinancing your mortgage in Quebec, the new lender needs to confirm your property's market value before approving the financing. This verification is done through a professional appraisal conducted by a member of the Ordre des évaluateurs agrees du Quebec (OEAQ). Appraisal fees represent an upfront cost that the borrower must bear, and it is important to include them in the complete cost calculation of your refinancing.

Cost Schedule by Property Type

Condominium: $300 to $450. The appraisal is generally simpler as comparables are often abundant within the same building or neighbourhood.
Single-family home: $350 to $500. The standard cost for the majority of residential refinances in Quebec.
Duplex: $500 to $700. The appraiser must analyze rental income in addition to the comparison approach, adding complexity.
Triplex or quadruplex: $600 to $900. The rental income analysis is more detailed and the report is more voluminous.
Luxury or atypical property: $800 to $1,500. Unique properties with few comparables require a more in-depth analysis.

When the Lender Absorbs Appraisal Fees

Several situations can lead to a reduction or elimination of appraisal fees. Some lenders offer to cover fees as a refinancing incentive, especially for large mortgage amounts (typically above $300,000 or $400,000). Seasonal promotions may also include appraisal fee coverage. Finally, some lenders have agreements with appraisal firms that reduce costs passed on to borrowers.

The Automated Valuation Model (AVM) Alternative

The Automated Valuation Model (AVM) is a technological tool that estimates a property's value by analyzing recent comparable sales, Quebec Land Registry data, local market trends, and property characteristics. The main advantage is no cost to the borrower and a near-instantaneous result. Limitations include potentially lower accuracy than a traditional appraisal and unavailability for atypical properties or rural markets with few transactions.

Automated Valuation Model (AVM): An automated valuation model that uses algorithms and real estate databases to estimate a property's value without a physical visit. In Quebec, AVMs draw on data from the Land Registry and transactions published by real estate boards, among other sources. Accepted only by certain lenders for low-risk files.

Strategies to Reduce Appraisal Fees

Negotiate with the lender through your broker: Your AMF-certified mortgage broker can negotiate the lender's assumption of appraisal fees, especially if the refinancing amount is high or if multiple lenders are competing for your file.
Check AVM eligibility: Ask your broker if your property and loan-to-value ratio qualify for a free automated valuation. This option is generally available for LTVs below 65% in well-documented urban areas.
Bundle with other incentives: Some lenders offer refinancing packages that include appraisal fee coverage, a contribution to notary fees, and a preferred rate. Ask your broker to compare overall offers rather than rates alone.
Verify the validity of a recent appraisal: If you obtained an appraisal within the last 90 days for another process (concurrent purchase, estate valuation), check if the same lender or an affiliated lender would accept reusing it.

Frequently Asked Questions

Who pays appraisal fees during refinancing?

Appraisal fees are generally the borrower's responsibility. They are typically required at the time the appraisal is ordered, even before the refinancing's final approval. If the refinancing is subsequently declined, appraisal fees are not refunded. Some lenders, however, offer to cover these fees in whole or in part as an incentive.

Is it possible to avoid appraisal fees when refinancing?

Yes, in certain situations. If the requested loan-to-value ratio is low (generally below 65%), some lenders accept a free automated valuation model (AVM) or a reduced-cost desktop appraisal. Your AMF-certified mortgage broker can identify these lenders and déterminé if your profile qualifies for this exemption.

Are appraisal fees refundable if the refinancing does not go through?

No, appraisal fees are generally non-refundable once the appraisal is ordered, even if the refinancing is declined or you decide not to proceed. This is why it is advisable to ensure the refinancing file is solid before ordering the appraisal. Your AMF-certified broker can do a pre-approval before triggering the appraisal.

Can an appraisal result be transferred to another lender?

Generally no. Each lender orders its own appraisals from its approved appraiser panels. An appraisal report ordered by one lender is usually not accepted by another. However, exceptions exist when both lenders use the same appraisal service provider.

How long is a property appraisal valid?

Most lenders consider an appraisal valid for 90 to 120 days. Beyond this period, an update or new appraisal may be required. During volatile market periods, some lenders reduce this validity to 60 days.