Understand how the lower of price and valuation affects lending, calculate the real funding gap and organise your options before deciding.
Key takeaways
- LTV uses the lower of price and appraisal.
- The real gap includes taxes, costs and reserve.
- A low valuation does not automatically cancel the CPCV.
A lower bank valuation changes the base used to calculate the loan. It does not, by itself, prove that the agreed price is wrong.
The Bank of Portugal explains that the property value for LTV purposes is the lower of the purchase price and appraisal. The published limits are caps, not an entitlement to that amount.
Calculate the real gap
If the price is €250,000, the valuation €220,000 and the applicable maximum were 90%, the illustrative loan ceiling would be €198,000. The buyer would need €52,000 to complete the price, plus taxes, registration, credit costs, insurance and a reserve. The bank may approve less after its creditworthiness assessment.
A disciplined response
- Obtain the full report and check areas, annexes, use, condition, comparables, limitations and documents considered. The bank must provide the valuation documents after receiving them.
- Separate asking price, agreed price, bank valuation and personal value. They answer different questions.
- Rebuild the complete budget and keep an emergency reserve.
- Have the CPCV finance clause, evidence requirements and deadlines reviewed. A low valuation does not automatically create a right to withdraw or recover the deposit.
- Correct objective errors with documents.
- Consider a written complaint or second valuation. Official guidance confirms these options, while the lending decision remains with the bank.
- A qualifying recent report prepared for another institution may be proposed under the conditions described by the Bank of Portugal.
- Compare renegotiating the price, adding funds without exhausting reserves, using another lender, or not proceeding.
Treat the appraisal as one credit-risk input. It is not a legal, planning or technical inspection of the property.
Official sources and references
Links consulted and cited in the article. Always check the current version for your circumstances.
Editorial note
Prepared by FRANETIC using identified sources. General information only; legal, tax, banking, technical and planning matters require case-specific validation.
