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If you're thinking about refinancing your mortgage, you're probably wondering if you'll need to get a home appraisal. The short answer is: yes, in most cases, lenders will require an appraisal to move forward with your refinance.

But don’t worry—this is a normal part of the process, and it’s there to protect both you and the lender. In this article, we’ll walk you through why an appraisal is needed, how it works, what it costs, and how you can prepare your home to get the best result.

Why Do Lenders Need an Appraisal?

When you refinance your mortgage—whether to lower your rate, change your term, or take out equity—your lender wants to make sure the loan is backed by a property that’s worth enough to support it.

Think of it this way: if you were loaning someone $400,000, you’d want to know the home you’re lending against is really worth that much. The appraisal is how the bank gets that reassurance.

That’s where the appraisal comes in.

The appraisal confirms your home’s current market value.

This helps the lender decide how much they’re willing to lend.

It also affects your loan-to-value (LTV) ratio, which plays a big role in whether you qualify and what rates you’re offered.

How Does the Appraiser Determine the Value?

Appraisers in Canada typically use something called the direct comparison approach. This means they look at:

Recent sales of similar homes in your area (called “comparable sales” or “comps”)

Then they adjust those sale prices up or down based on differences (like size, condition, or features)

The final result is a professional opinion of value based on actual market data

Here’s an example:

Let’s say three similar homes in your neighborhood sold for $700,000, $710,000, and $720,000. If your home is in slightly better condition than those but has a smaller backyard, the appraiser might make adjustments and estimate your value at $715,000.

It’s not a guessing game—appraisers follow a standardized method to ensure the result is fair and objective.

Who Orders the Appraisal?

When refinancing through a mortgage broker (which many Canadians do), your broker will arrange the appraisal for you.

But it’s important to note: lenders only accept appraisals from appraisers on their approved list. That’s why you can’t just hire anyone—you need to go through the right channels to avoid delays.

Here’s how it usually works:

Your broker finds out which appraisers are approved by your lender

They order the appraisal directly or through a third-party service

The appraiser contacts you to schedule a time to visit your home

The process typically takes 1–3 business days from the time of inspection to receiving the report

The report is then shared with your broker and lender to help move your refinance forward.

How to Prepare for an Appraisal to Get the Best Value

Believe it or not, how your home looks matters—not just for buyers, but for appraisers too.

While an appraiser won’t be swayed by new furniture or scented candles, they do consider overall condition and presentation when evaluating your home. A clean, tidy, well-maintained property shows pride of ownership and can positively influence their opinion.

Here are some simple things you can do before the appraisal:

Clean up the home, inside and out

Fix small repairs, like leaky faucets or broken light switches

Cut the grass, trim hedges, and tidy up the exterior

Declutter rooms to make them appear more spacious

Point out any recent upgrades, like a new roof, furnace, or windows

You don’t need a full renovation, but small touches can make a big difference. Appraisers are human—showing that you take good care of your home can help give them more confidence in its value.

How Much Does a Home Appraisal Cost?

In most parts of Canada, a standard home appraisal costs between $400 and $500. However, the price can vary depending on:

Your location — Appraisals in major cities or rural areas may cost more

The size and complexity of the home — Bigger or more unique homes take more time to evaluate

How urgent the request is — If you need a rush appraisal, you might pay a premium

For a typical single-family home in a suburban neighborhood, you can expect to pay somewhere in the $450 range.

Unique or High-End Homes Usually Cost More

If your home is unusual or significantly more expensive than others nearby, expect the appraisal cost to be higher.

Why?

Because these types of homes are harder to compare. There may be fewer recent sales of similar properties, so the appraiser has to do more research and analysis to come up with an accurate value.

Examples of homes that might cost more to appraise:

Custom-built homes with unique features

Properties on large or unusual lots

Luxury homes or estates

Homes in rural or low-turnover neighborhoods

The more time and effort it takes for the appraiser to find good comparables, the more the cost goes up.

What If the Appraisal Comes In Too Low?

This is one of the biggest concerns homeowners have—and it’s a fair question. So what happens if the appraised value is lower than you expected?

Here’s how it can affect your refinance:

1. Lower loan amount

If your home appraises for less than expected, you may qualify for a smaller loan. For example, if you were hoping to borrow 80% of a $700,000 value ($560,000), but the appraised value comes back at $660,000, that 80% max drops to $528,000.

2. Higher loan-to-value ratio (LTV)

A lower value can push your LTV above a lender’s limits. Most traditional lenders cap refinances at 80% LTV. If the new number is over that threshold, your options may become more limited, or you may need to consider a second mortgage.

3. Change in rates or terms

Some lenders offer better rates to borrowers with lower LTVs. If the appraisal pushes your LTV up, you may no longer qualify for the best rate tier.

What can you do if the value is too low?

Ask your broker to review the appraisal report with you.

In some cases, you can challenge the appraisal if there’s a clear error or if better comparable sales were overlooked.

If the lender allows it, a second appraisal may be ordered (at your cost).

Your broker might also explore alternative lenders with more flexible guidelines.

How Lenders Use the Appraisal in a Refinance

Once the appraisal is complete and the report is submitted, here’s what happens behind the scenes:

The lender reviews the appraised value to confirm it aligns with their internal risk guidelines.

They calculate your loan-to-value (LTV) ratio using:

Loan Amount ÷ Appraised Value = LTV

This number affects whether you qualify and what rates or products you’re offered.

If everything checks out, the refinance proceeds to final approval, and your broker or lender will begin preparing the legal paperwork.

Do You Need an Appraisal for Mortgage Refinancing?

Yes, in most cases.

Lenders want to confirm your home’s current value to make sure the loan amount makes sense based on today’s market.

An appraisal gives them that peace of mind—and it gives you a clearer picture of your home equity, which is helpful if you’re refinancing to pay off debt or fund renovations.

The appraisal is arranged by your broker with a lender-approved appraiser.

Costs range from $400–$500, but can be higher for unique or luxury homes.

How your home looks matters—cleaning up and showing it well can impact the final opinion of value.

Don’t panic if the value is lower than expected—your broker can help find solutions.

Still have questions or thinking about refinancing? A knowledgeable mortgage broker can walk you through your options, arrange your appraisal, and help you decide whether now is the right time to move forward.