Property valuation for a home loan in India

The rule

• LTV caps (central, RBI). Paragraph 111 (B.6, Quantum of Loan) of the Credit Facilities Directions for commercial banks sets the caps above. See home loan down payment and LTV for the arithmetic.
• What counts in the value (para. 113). “In order to have uniformity in the practices adopted for deciding the value of the house property while sanctioning housing loans, bank shall not include stamp duty, registration and other documentation charges in the cost of the housing property.” Exemption: where the cost of the house does not exceed ₹10 lakh, the bank may add them for calculating LTV.
• Valuation policy (RBI circular of 4 January 2007). Banks “should have a Board approved policy in place for valuation of properties including collaterals accepted for their exposures”; the valuation “should be done by professionally qualified independent valuers”, who should not have “a direct or indirect interest”; banks “should obtain minimum two Independent Valuation Reports for properties valued at Rs.50 crore or above”.
• Panel of valuers (same circular). Banks “should have a procedure for empanelment of professional valuers and maintain a register of ‘approved list of valuers’”, and may set different qualifications by class of asset (land and building, plant and machinery, agricultural land).

The 2007 circular is still published on the RBI site. Payotte did not confirm whether it was carried into the RBI’s consolidated 2025 directions or withdrawn.

Lower of price and value?

Many lenders say they lend on “the lower of the price and the valuation”. In the RBI Credit Facilities Directions Payotte read, paragraphs 111 and 113 speak of “the value of the house property” and “the cost of the housing property”, and Payotte found no paragraph requiring the lower of the two. Treat it as a lender policy unless your lender cites a paragraph. The practical effect is the same: if the valuation comes in below the price, ask whether the loan will be computed on the lower figure, because your down payment then rises.

Who the valuer is

• The bank’s empanelled valuer. Chosen by the lender from its own approved list, under its board-approved policy. Housing finance companies are regulated separately; the NHB’s reverse mortgage guidelines, for example, have the lender fix market value “through their external approved valuer(s)”, with in-house valuers allowed if the method is disclosed.
• A registered valuer under the Companies Act. The IBBI keeps the register of valuers registered under section 247 of the Companies Act, 2013, by asset class, one of which is Land and Building. The Companies (Registered Valuers and Valuation) Rules, 2017 govern valuations required under the Companies Act, and their rule 1(3) explanation says valuation “under any other law” is “not affected”. The texts read do not require a bank to use an IBBI-registered valuer for a home loan. See registered valuers for how to check one.

Three numbers that are not the same

A valuation may be above or below either figure. It does not change your stamp duty, which follows state law, and it does not set the price.

Step by step

1. Before you sign, ask the lender which valuer it will use, the fee, and whether it lends on the lower of the price and the valuation.
2. Give access and documents: the agreement for sale, approved building plan, occupancy or completion certificate for a ready home, the RERA registration for a project, and title papers. See occupancy and completion certificate and RERA project registration.
3. The valuer inspects the site and compares the property with its records and local data; for an under-construction flat, the bank also links disbursal to construction stages (para. 116 of the Directions forbids upfront disbursal for incomplete projects, with exceptions for government-sponsored projects).
4. Read the sanction letter: the sanctioned amount reflects the valuation and the LTV slab. If it is lower than expected, ask for the valuation figure.
5. If you disagree, you can commission your own valuation from a registered valuer and put it to the lender. The texts read give the borrower no right to a second bank valuation.

Which professional to consult

A home loan lender for its valuation policy; a registered valuer (Land and Building) for an independent opinion; a property lawyer (an advocate enrolled with the State Bar Council) for title papers. Use the home loan calculator once you know the loan amount.