Hi,
After signing an offer and acceptance, I approached bank through Broker and requested to process my pre-approved loan with them. At the same time, I was requesting them to give upto 85% loan without LMI. It takes extraordinarly long and now the finance clause in offer and acceptance is expired and owner has verbally granted a extension for a week or so. Bank and broker were silent for so many days and finally informed that they are definitely not going to forgo the LMI after my many emails about asking them their decisions at the earliest. Then I asked them to submit a letter that my loan is not approved as a proof for my records. I was told that they would not give a letter that my loan is not approved unless I show a proof that I dont have sufficient money in the account to pay 10% deposit as agreed in the Offer & Acceptance. Otherwise, they asked me to send a letter to stop processing the loan if i dont wish to proceed. They also advised you can continue processing this application and at the end its your choice to choose the loan between two banks.
In the mean time, I approached another bank on my own and submitted all requested documents to processes my full loan approval. They checked all documents and advised that could take 3-4weeks to process it. Though Seller agent has agreed to wait verbally, I still concern for these delays.
My question are as follows…
1. Can I ask the first bank to continue processing my loan? If my loan is approved in the first bank, will that hinder in approving my loan in second bank due to credit check etc?
2. I definitely want to buy that house, is it safe to give him more deposit to raise the owner confidence?
Expecting your valuable advise?
Cheers
I'd be wanting that extension in writing, and I would not be parting with more cash to raise owner confidence. It is not like this is the last house available on the planet. Life will go on if this deal doesn't work out for you.
Yes, I believe that any loan rejection goes on your credit file, which is a negative for future applications. So if you think you'll be rejected, it would not be wise to proceed with the application.
What does your contract say about finance. Does it say something like "subject to finance acceptable to purchaser" or does it say something like "subject to 85% finance" ?
Has the bank had the house valued as yet? You'd want to look at that anyway to ensure you've not offered to buy an overvalued house and then be busting your gut to get finance for it.
What does your solicitor say about the matter? If you don't have a solicitor, I'd suggest getting one immediately to help look at the situation and prevent you getting sued for breach of contract.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Yes you can run 2 loan applications at once. you may be charged if you don't proceed though if the bank orders valuations and does the paper work etc, so check.
You should also ask your solicitor about getting the extension.
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
JacM wrote:I'd be wanting that extension in writing, and I would not be parting with more cash to raise owner confidence. It is not like this is the last house available on the planet. Life will go on if this deal doesn't work out for you.Yes, I believe that any loan rejection goes on your credit file, which is a negative for future applications. So if you think you'll be rejected, it would not be wise to proceed with the application.
What does your contract say about finance. Does it say something like "subject to finance acceptable to purchaser" or does it say something like "subject to 85% finance" ?
Has the bank had the house valued as yet? You'd want to look at that anyway to ensure you've not offered to buy an overvalued house and then be busting your gut to get finance for it.
What does your solicitor say about the matter? If you don't have a solicitor, I'd suggest getting one immediately to help look at the situation and prevent you getting sued for breach of contract.
It says "within 21 days from acceptance and amout of loan 90% purchase price" and below the email confirmation from seller agent
<<
"Yes, the finance clause will continue until either you satisfy the condition, provide a letter of decline, or the sellers notifies in writing that the contract will become null and void. However, yes he has verbally agreed to allow this to continue for the week.
As soon as this finance condition is met, we will proceed to settlement within 28 days after final conditions (timber pest inspection and final inspection) are satisfied.">>
verbal agreements can be withdrawn.
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
coolboy wrote:I was told that they would not give a letter that my loan is not approved unless I show a proof that I dont have sufficient money in the account to pay 10% deposit as agreed in the Offer & Acceptance.Can you arrange for it to be the case that you have less than 10% in your bank account then? It seems that if you can do that, then you'll get your letter of rejection. Maybe that is illegal. Does anyone know if it is legal to do that? Or in fact would a loan offer letter offering 85% achieve the same result? (Because 85% is not the required 90% as specified by the subject to finance clause in the contract of sale.)
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
in worst case, i will have to take up the loan with first bank with LMI….
Thanks
ThiruYour bank's issue is that they haven't "declined" finance. I presume they are happy to do it at 85% with LMI, so I can understand their reluctance to put something in writing to suggest otherwise.
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