Hi All
I just thought I would guide people with my suggestion as to what you should be looking for from your lender in terms of the likelihood of finance approval.
This arises from a number of enquiries I have had recently from clients that have come from a high profile non-bank mortgage broker. This mortgage broker indicated that the client would be able to get finance only to come back later to decline. In some circumstances they have declined with only a week before settlement. No one wants to be put in this position so…
To avoid this happening to you there are a couple of things you can do.
1. A pre-approval is the best way. For example, if you think your next purchase is going to be approximately $150,000 with a minimum yield of 8% then why not ask for a pre-approval on this basis. The lender will then give you an approval based on these certain assumptions. A pre-approval does not cost anything and does not obligate you.
2. If there is something non-standard about the property you are considering purchasing (e.g. serviced apartment, etc.) then get something in writing from the lender that says it’s ok. Don’t take anyone’s word for it. For example, if you are using a broker then get them to email the lender (and get a copy of that email) or provide you with a brochure (or similar) that stipulates serviced apartments are acceptable.
3. Never go unconditional on a Contract of Sale unless you have an unconditional (or at least conditional) approval for finance.
I would be interested to hear about anyone else’s suggestions.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auStuart
I can guess who you are talking about and agree with you on that one!
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
[
]Can only strongly support Stuart’s comments about getting pre-approval. As I mortgage broker, I detest telling potential clients that the property they have their heart set on can’t be financed because of x y &/or z. We had a client who spent a lot of money on property inspections etc even after I had told him getting finance would be very difficult because of the property location and LVR required. He insisted we try, so we were both out of pocket.
With preapproval, he would have known what he could have purchased, and be certain that he finance the deal if everything else was ok.
With preapproval, it gives us the opportunity to really assess our clients needs and circumstances and get the best possible arrangement for them.Hi Michael
Yes – some people do obtain finance AFTER signing contracts… probably not the best way to do it. It sounds like you’ve got everything under control.
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auI am surprised to hear about this, since the conveyancer will usually confirm loan approval and ask for it in writing, before making the contact unconditional.
I must admit to getting finance after I have signed. I always allow a building inspection clause so if things do go bad I can walk on that basis. I never put finance down as a clause because I know I can always get money. It may be dearer than average but there is always a way…….
Enjoy
AD [:0)]
(Andrew)“Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved.”
It does happen.
I currently have a client who has gone unconditional on a $915,000 purchase. AND he wants a low doc!
Terryw
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
]Can only strongly support Stuart’s comments about getting pre-approval. As I mortgage broker, I detest telling potential clients that the property they have their heart set on can’t be financed because of x y &/or z. We had a client who spent a lot of money on property inspections etc even after I had told him getting finance would be very difficult because of the property location and LVR required. He insisted we try, so we were both out of pocket.
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