My girlfriend(Ashly) and I are approaching the end of our battle with Keystart. It's been a long process and has caused me great stress and I'm certain ours must be a rare case, at least, I hope it is. I thought I'd post our story and see what others experience has been. I appologise for the length.
Briefly; we got our formal approval about 2 weeks ago and that is a around 5 months from when we put the application in at the end of February. For further details, read on.
The story is this, around the end of January with announcements that the FHOG boost would be ending soon, we decided to take advantage of it and build a house. We started looking at houses and contacted a mortgage broker. After assessing our situation we decided Keystart would be the best route to take and by the end of February we were committed and had our mortgage broker put our application in for a $500k loan(the maximum lend from Keystart at the time, more than we intended to borrow, but it's good to have flexibility). At the time, our mortgage broker said it normally takes a couple of weeks to get pre-approval and we were both excellent candidates(decent pay, no debt etc.) and it should go through easily. At about this time we also signed preliminary contracts on a house and put an offer in on a block.
It took around 2 months for the pre-approval to finally come, during which time we had to re-submit our bank statements because it had taken so long the original ones were not of any use. When we did get the pre-approval the amount was now only for $412k, apparently Keystart had changed their policy and now $412k was the maximum lend amount. This, being significantly less than we had been expected, made things a bit tighter but luckily because keystart had taken so long, we'd saved a bit more money and we could still do it without too much sacrifice at pre-start.
We notified our builder that we had pre-approval and organised pre-start, they did everything extremely quickly knowing what it's like to deal with Keystart, so in about a week everything Keystart had asked for on the list that came with the pre-approval(house plans, bank statements etc.) was completed, compiled and sent back.
This was an exciting time, everything was done and according to the pre-approval form, once everything is submitted it would be 5-10 working days until formal approval. After about a month of waiting, Keystart finally contact us to say that our total house and land package is not allowed to exceed $412k(which it did, by a fair amount). On our original application it was $500k and after checking our pre-approval which came back at only $412k lend, it said nothing about the maximum value of the property. Our mortgage broker was furious and had his state manager onto Keystart and did all he could, but it made no difference. Keystart said that $412k is final. We had 3 options, apply with a bank which would take at least a month and would almost definitely result in losing the block seeing as finance had already been extended for a couple of months at this point, complain to the commissioner, which would take quite a few weeks and again, result in losing the block, or try and reduce the house price somehow.
So seeing as losing the block was the last thing we wanted, we spoke to our builder and managed to reduce the price enough to be under the limit. Contracts had to be re-drawn and sent to Keystart(thanks to our builder we did this within 2 days of being notified of the price limit by Keystart), who then proceeded to take their time. Because finance was well over-due for our block we asked them to put the job through as urgent, but they said they couldn't put it as urgent until 5 days after the new paperwork had been received(I assume it must sit in their in-tray during that time).
About a week after submitting the new contract, Keystart contacted us and said they need proof that my Ashly's credit card has been cancelled. Not an unreasonable thing for a lender to ask for, except that it should have been asked for at pre-approval, not 2 months after. That was sent to them the following day and at this point we were pretty sure they were just playing with us, obviously we had done something horrible in past lives or something.
About 3 weeks after submitting proof that the credit card was cancelled, we got our formal approval. We were extremely lucky that the land owners were very understanding and ended up extending the finance date about 4 months from when it was originally due. We notified the land owners and settlement is due on the 28th of this month.
A couple of days after receiving formal approval, we received the loan documents in the mail, read through them all and posted them back on Sunday afternoon on the way to the airport for me to go on training for 1.5 weeks(returning the day before settlement), glad that everything got to us before I had to leave. On Monday, however, we received more documents from Keystart to sign and return(why couldn't they have sent them all at the same time?). Ash scanned the forms and emailed them to me, I then printed and express posted them back so Ash could sign them and return them to Keystart. Apparently Keystart could tell they were copied and there was a problem, but they said they will resend the forms and we can take them in in person when I get back and it will all be processed in time for settlement, or so we're told anyway.
So that's where we're at right now. It's been an absolute pain in the *** dealing with Keystart and our mortgage broker said that this is by far the longest application he's been involved with. I think Keystart is a good organisation and I'm glad that there is something like it to make it easier for people to buy a home(we saved about $10k in mortgage insurance), but it has been incredibly stressful and whilst I understand that they have a high workload at the moment, I think a little extra understanding and information would go a long way.
With any luck, our finance issues are over now and it will go smoothly on the 28th, our builder has already told us they're ready and raring to start as soon as they get that settlement letter, so we may see some progress soon hopefully.