i found a property which is very suitable for my requirements, but only problem is that its going for auction, strictly no offers at all.
i am a first timer, got a pre-approval in writing from my bank (homepath). i have 10% deposit plus have money to pay all purchasing expenses.
i talked to agent who is arranging this auction, and according to him:
– i will have to pay $1,000 at the end of auction.
– will have to pay 10% of the price minus $1,000 on monday (next business day)
– then rest would be on 30 days settlement.everything seems fine and right at this stage. i have made up my mind and have done all calculations to fix my max limit in auction.
my Question is if i will buy this property in auction for 270k, and pay 27,000 as deposit from pocket.
what if my bank (homepath) will comeup with some sort of excuse to pay rest of 90%?
will i loose all my $27,000 of deposit?i contacted homepath, and they told, me that they dont care if i buy from private sale or auction or agent or relative/friend.
but i think i am just bit scared and not ready to loose my $27,000 deposit money.
can someone please advise, whether i’m scared for nothing or does it happened with someone or someone you know, thanks.
Homepath are shockingly slow. I have used them and heard all the horror stories. I personally would think twice about using them.
Homepath will have done no checks into your CRA, incomes and of course no valuation. Their pre approval just means that based on the numbers you supplied you will be able to afford the loan.
If I was you I would contact a decent broker and ask him for a backup plan.
I guess the major obstacle is valuation – if you pay too much and the valuer reckons it is worth less then your loan may not cover the settlement.
The downside to auctions is that once you win it you have no get out clauses if the val is poor or a building inspection turns up a problem.
Please be well organised before comitting yourself.
Having said all of that – an auction can be a great place to score a bargain as so many people wont attend as they are scared of the whole auction process or simply don’t like it.
Good luck,
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
thanks Mortgage Hunter for your response.
Homepath has done CRA on my credit file, but they have not asked me to provide bank statements or anything else.
in auction, if you pay 10% deposit and then bank will not give you loan, do you loose all your 10% deposit or are you entitled to get it back???
Is it the first property you are buying?
You obviously are a bit stressed about settlement. If this worries you so much – just sort out what the worth case scenario is, make sure you can afford it and try to protected yourself from possible problems as much as you can. At least you will sleep better at night.
• Develop your plan B, and may be even plan C mortgage (if it really doesn’t let you sleep at night). Just ask your mortgage broker to get you another pre-approvals on mortgage. It wouldn’t cost you nothing. At least you will know that if you have to you can quickly settle with another lender
• When you exchange the contract ask your solicitor to negotiate the interest fees on late settlement (it will be mentioned in the sale contract) I don’t know if this is the industry standards, but for every property I bought it was initially 14% and we asked a vendor’s solicitor for reduce it to 9% and it always was approved.
• And can’t emphasise enough – make sure you have a good solicitor and mortgage broker (references!!!).
I understand after the auction the settlement process is the same as with normal sale – there will exchange the contracts and there will be few weeks before you settle. It’s the time for solicitors and you mortgage broker to prepare all legal work and a loan.
If something goes not look right with your lender – they should see it and they will fix it before settlement (make sure you have a right team).
I don’t think you would lose a deposit unless you decide not to go with the purchase at all, but definitely not if you are late with the settlement. But the worth case scenario if you settle later for any reason – you will be entitled to pay interest on the outstanding amount to the vendor until you find another lender.
If this worries you so much, or if you have any problems – shoot me an email, I’ll give you contacts for my solicitor and mortgage broker. They both are really good. With solicitor – I don’t have to pay any fees if for some reason I don’t settle.And the broker is really quick and does most of work over internet and always was able to get me the higher then overage discounts on mortgage even on the weirdest and most unstandard properties.
Good luck with the auction!
Cheers
Lesia
[evo]
http://www.vmstreamline.comHello orica
On the day of the auction ask again if it’s possible to have a 60 day settlement ….. before the auction starts. Depending on the interest for the property they may say yes which will give you extra breathing space. Nothing sacred about 30 day settlements.
The problem with auctions, as Simon mentioned, is that you buy unconditionally so if you want a building inspection get it done before hand.
Good luck [smiling]
Elkaorica
I am with Simon whatever you do do not rely on Homepath to settle a transaction for you within 4-6 weeks.
Their customer service is a disagrace and trying to get through to them is a nightmare not only pre but also post settlement.
The no frills products that they offer are just that with no frills service either.
Remember in most States if you don’t on the due date then the Vendor has the right to rescind the contract and you would in turn loose any deposit that has been paid.
I can think of a dozen institutions i would approach who would give you a pre-approval and also obtain a valuation for you prior to going to auction and would run off that valuation if your purchase was successfull.
Just think first before you tread that PATH.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
problem is that Hompath is the only lender gave me pre-approval
so i dont have choices here.
How many did you try? I can think of any number that will approve more than Homepath will. They are no less stringent than other lenders.
Please contact a broker. I am not saying that to drum up business for myself either.
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
ok Simon, i will write you my sitution on your email address, and then you let me know. any help woul be great.
I can also confirm… do not use Homepath.
Similar to yourself I bought at auction and was eager to get the loan processed in th 6 week settlement period. I therefore went with Homepath for the low interest rate and because they had “pre approved me.”
The pre-approval meant nothing… they drew out the application process and were not at all friendly or helpful for me, a first home buyer. After finally getting all the paperwork sorted I recieved the loan and moved into the house to find they have increased my fixed term rate from 6.99% to 7.09%. How can they do that after every document I signed was at 6.99% and at not time did they mention a rate rise until after I recieved the loan.
They now will not return my calls or deal with my complaint. I’m seeking the help of the department of fair trading and my solicitor to rectify the matter.
DEALING WITH HOMEPATH IS NOT WORTH THE LOW INTEREST RATE!!!!
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