Finance formally approved… but in fact, not!

Hi all,

I would like to share a story that just happened to me:
My wife and I just purchased a new IP in Brisbane. Contract was signed mid-May, subject to finance approval.
Before going into contract, we were conditionally approved (in April) for a larger amount than what we bought the property. After the contract was signed, my broker submitted all necessary paperwork for the loan application to the bank.
After my broker received the formal approval, I passed this information to the conveyancer and therefore the contract became unconditional.

Few days later, my broker contacted me as the bank has withdrawn their loan approval (!!!). The bank called my broker and said they made ‘a mistake’, and therefore they were withdrawing their offer letter. My broker pushed very hard, but, even if they were accepting the fact to have made a mistake, they would not come back on their decision and the loan was refused.

What happened:
My wife and I are leaving overseas and we were applying for a loan on both names while the title of the property was on my wife’s name only.
The mortgage insurer has decided post approval that they would not insured a loan with the title on 1 name and the loan on joint names. Apparently, it would come from the recent changes in loan approval.

How did it end up:
Thanks to a great team (broker and conveyancer), we successfully went through it. We proposed to the seller to change the name on the contract of sale in order to have both names, which they accepted. The conveyancer prepared a deed of rescission and updated the contract.
Then, we re-applied for a loan (with the same bank) as tenants in common (1% on my name, 99% on my wife’s name).
Loan was then approved (and no change of mind from the bank since…) and we’re ready for the settlement next week.

I guess it must not happen so often (hopefully) to have a loan approval from the bank which is then, later on, withdrawn…