Final Loan Approval Declined - Can they do this?

Hi All,

I was approved for pre-approval and then approved for unconditional approval. I then applied for my final approval so that the house building could get under way and I was declined. The only reason for this was the leanders mortage insurance wanted me to have my land loan for 6 months before they would lead me the money. Can they do this, let me get so far through finance and then declined me at the very last step. The house now has to put put on hold for 2 months. Very disappionted.

Which Bank?

Bankwest, not my normal bank which is ANZ and they wouldn't give me enough so I had to go else where.

Well yes obviously they can do this. You must be a higher risk loan since the ANZ will not approve you, hopefully you can get a loan elsewhere.

I've learned that banks can pretty much do anything they want now days Our loan is with Bankwest and it took us forever to get final approval cause they kept changing the criteria. From memory the pre approvals don't actually look at what type of house you are building, just at your savings and employment etc. Did it have anything to do with the valuation?

They shouldn't change their mind from an unconditional approval. If they had approved it subject to mortgage insurance and then the mortgage insurer declined it then yes they can do that. I guess that is probably what happened.

Unfortunately the banks are in quite a mess at the moment because of the large volumes of first home buyers applying for loans. They just can't cope! As a result their service is becoming inconsistent and they have a lot of temp staff that are not experienced and cause a lot of problems.

There isn't much you can do if the mortgage insurer declined the loan as they make whatever rules they please and BankWest will not have much say over what they do.

Well it was so stupid I got so far they wanted to put slab down this Friday I did my pre-start everything was running smooth then I got that letter! As my broker said it prob just depended on the guy's mood that day. They just want to see that I can make my repayments for 6 months. I guess it don't matter I owned a house with my ex for 3 years and never missed a payment or I have a 100% credit rating. See what they say in 2 months.

That is a two wage loan. It is much harder now to get a loan on just the one wage. The bank is telling you, you can't afford this loan, I think you need to redo some sums.

Ugh, what a terrible roller coast ride. Hopefully you get something sorted out soon.

Make me very nervous about whether we'll ever get a home loan. It all seems so hard!

If they unconditionally approved her it means she has passed their lending criteria already as far as income goes.

Only thing that can change unconditional approval is a change in circumstances such as an interest rate rise or you lose a job.

If the bank gave you unconditional approval - keyword being unconditional and you acted on this and have proof you can probably force them to give you the loan as you would at law be a loss because of them.

I know someone with a loan at a major bank who was issued unconditional approval before credit had completed their work... bank manager stuffed up BIG TIME anyway they got the loan regardless of what credit had to say because the builder actually had started to build the house...

Talk about a major stuff up.

The ANZ did not approve her, it means she dosn't make/have enough money. In the banks eyes she simply cannot afford this loan. You don't get loan approval declined if you have plenty of money.

Yes the bank has pretty much said yes it was the lenders mortage insurance that said they wanted me to have my existing loan for 6 months before they lend me the money. This should have been picked up when I applied for pre-approval but wasn't and things kept progressing. I then got unconditional approval and this was still not picked up. I just found it wrong that they can get me this far put a deposit on the house and then turn around and say no you now have to wait 2 months and re-apply.

Not suprising that you're having issues with Bankwest. Read my other post regarding how they handled my brothers loan application. He clarified his employment situation with the branch manager, and they gave him a pre-approval after doing a credit check. The manager even told him not to worry and go ahead with putting an offer on the place he likes. Which he did, and then a week later they rejected the loan

what percentage were you borrowing? 80% 90% etc.

MichelleHill

If you want to get a second opinion ( escalate the issue) :

Bank of Western Australia Limited

Mrs Sonja Higgins
Head of Service Quality
08 9449 2525
or 1800 650 111

Ms Linda Van Gent
Manager Customer Advocacy
08 9449 2525
or 1800 650 111

or

Written complaints to :

Mrs Sonja Higgins
Head of Service Quality
Bank Of Western Australia Limited
Level 31 Bankwest Tower
108 St Georges Terrace
Perth Wa 6000

Fax : 08 9449 2555

If you can find out who the insurer is you can also escalate the issue thru the insurers escalation process. Failing this you can contact http://www.fos.org.au - Financial Ombudsman and file a complaint to ensure there is no discrepancies.


P.S - there is no such thing as a 100% credit history in Australia - you either have a credit file with no defaults or you have one with defaults - insurance companies also look at how many inquires you have on your credit file. Although you may not have any credit cards etc at the moment, if you have a high number of inquires. i.e 30 in the last 5 years - that could warrant you as a high risk customer. Prior good history is treated as next to nothing.. Its a old school perception that if you were good before you will continue to be next time around, unfortunately the banks don’t operate like that anymore.

Good Luck

We had a similar situation at the start of the year with our bank and since then things have got alot tougher.

Essentially unless you have been given your loan documents the ombudsman cannot do anything about it. This is the cruel part about it. Unless you can avoid LMI you are at the mercy of the Insurer assessing your risk profile and if you are worth the risk. Banks will give you unconditional approval but it is usually subject to clauses eg LMI insurance.

It may be worth taking it up with the bank through the complaints department and see how you go. If anything try and get the application taken of your credit file if you can, and when you apply elsewhere let them know what has happened. They will then take this into consideration when assessing your application.

All the best with it, it is truly a bitter pill to swallow when you get knocked back, but keep fighting for it if you can as when you get it all through and the house starts you soon forget about all the problems you faced trying to $$.