Browse Forums Home Finance 1 Jan 28, 2010 3:11 pm Can anyone shed some light on this, we had been pre approved from our bank for a ridiculous amount, more than we needed, and we used the pre approval as a basis for how much to budget for and we have ended up below, now, a month later, we are trying to get the loan unconditional, and we have been told that we can’t borrow the amount we need, despite it being less that the pre approved amount. What good is pre approval if it means nothing to begin with. Now we are in a situation we don’t know how to fix, we have signed contracts (so are locked in) and have paid our deposits. Can someone help us work out how we can get this loan approved. We are already at a last resort with this lending institute so we can’t go elsewhere (we are in a complicated financial and work situation that the banks don’t like - long story) Re: Pre-approval - what good is it? 2Jan 28, 2010 4:02 pm Unfortunately pre-approvals are not always worth anything in today's market. Most pre-approvals never get assessed by a Credit team or the Mortgage Insurer until they become an actual loan application. And these two sections of the credit process ultimately have the final decision whether your loan is going to be approved or not. Added to that if you are in employment which is not looked upon favourably it could mean that they will be unwilling to budge on the preapproval. You would be best to sit down with your lender / broker face to face and ask what your course of action should be. They may be able to restructure the loan so it meets both yours and the lending institution's requirements. Good luck. Some things are worth waiting for. Re: Pre-approval - what good is it? 3Jan 28, 2010 6:56 pm Most contracts will have a subject to finance clause to cover you if a bank will not finance you. granted you will most likely lose your deposits. Maybe another option is to try to go through your builder's finance company (most have one they deal with) as they might be able to pull something together for you. Building Sandhurst 36 Porter Davis Currently Fixing Re: Pre-approval - what good is it? 5Jan 28, 2010 8:19 pm Always, Always, ALWAYS make sure that there is a "Subject to Finance" clause in every building or land sale contract ... it will save your bacon. At worst, it will give you an unarguable excuse to get out. Built a Tribeca 44 with the Big M Sales Accept 15/06/09, Contract Signed 24/09/09, Site Start 23/11/09, Slab 11/12/09, Frame 12/01/10, Roof 20/01/10, Lock-up 30/03/10, Fixing 30/04/10, Handover 27/08/10. Re: Pre-approval - what good is it? 6Jan 29, 2010 7:03 am We have a subject to finance clause in our contract, but like chickad23 said, we will lose our deposit, then we have lost our savings (we have pretty much put all our life savings into this) and it will be years before we can save that money again. Bek, yes we have, like I said in the first post, we are at our last resort Re: Pre-approval - what good is it? 7Jan 29, 2010 8:13 am kyton Unfortunately pre-approvals are not always worth anything in today's market So what is the point of having pre approval then? Current status: Busy making the house our home Built PD Francis 29 on our 576m2 block at Reflections in Tarneit Reflections Estate Thread Our Build Thread Re: Pre-approval - what good is it? 8Jan 29, 2010 8:18 am Pretty much useless unless you have a straight up loan with no complications - ie no mortgage insurance involved / excellent employment history / excellent deposit etc. If there is anything out of the ordinary or if mortgage insurance is involved then really a preapproval is not worth anything IMHO. Some things are worth waiting for. Re: Pre-approval - what good is it? 9Jan 29, 2010 8:37 am So why would they give us pre approval then? They knew about our situation from day 1, then after receiving the pre approval, they told us that that is our budget, we managed to stay under by about $15000, I still don't understand why they would pre approve such a large amount then say we can't get that much anyway. Re: Pre-approval - what good is it? 10Jan 29, 2010 9:20 am I received a pre approval for a mortgage. Just to satisfy myself that I was able to receive a loan within my means. I paid $1000 deposit for the block and only paid $1500 deposit when I sign the first building contract. I actually found out after a few months later, that the particular bank's loan was too expensive. So I applied for another mortgage with a different bank, through a Broker. I think only four banks would look at me including, ANZ, CBA and Bankwest. Have your tried a broker? Your Mortgage magazine is a wealth of information. Why was the deposit so large? My mortgage is about 400k in total. I have 95% equity in my current property, And a LVR - Loan Value Ratio of exactly 60%. I think it has gone up because of some price increases. Over 80%, banks really required mortgage default insurance, only to cover themselves really. I also invested in a income protection plan. Re: Pre-approval - what good is it? 11Jan 29, 2010 9:39 am Yep I was just about to say, go straight to your nearest mortgage broker. Don't worry about the banks, it's too hard to get a loan direct through them if you're in times like these. Going back around 8 years, I built a house with my partner, but mid way through we split up and he accrued so much debt it just wasn't funny ... then 4 months later we had to refinance as we couldn't pay all the loans he then had. I rang a mortgage broker to consolidate. The mortgage brokers deal directly with the banks so know who will lend and who will not. I can't recommend them highly enough! We used them also for the house we're currently in, and have just bought a block and organised a house to build on it, all through a mortgage broker. The advantage, at the very least with a broker, is that you get their full attention as they don't get paid unless they get you finance! (and they get paid by the bank!) Great advice! Re: Pre-approval - what good is it? 12Jan 29, 2010 10:00 am *MrsG* go straight to your nearest mortgage broker Been there, done that, we got sick of being stuffed around by mortgage brokers. We’d go through a broker and they kept applying for loans that we knew we wouldn’t get, we told them why are you applying for that loan, we know we won’t get it, “yes you will, go through me and you will”, well we didn’t. In the end I got sick of them and pi**ed them off (we went through 2 and contacted about 5 others). In the end I did it myself and got the loan (this is for the block of land we purchased). We got that loan ourselves no prob, but now we are trying to get the construction loan through the same lender, and this is where we have run into the problem. Re: Pre-approval - what good is it? 13Jan 29, 2010 11:35 am If you do bite the bullet and give a broker a go I can thoroughly recommend the one I am using. Mortgage Choice Stuart Thompson 9879 1499 Found him to be very approachable and very direct with his answers. He is actually one of the partners as opposed to an employed agent bucking to earn his commision ( not that he wont claim it of course! ) Building Charleton 283 with Henley. Stage 11 - Alamanda Point Cook Build contract signed 22nd September 2009 Land settled - 17th May 2010 Site Start - 25th June 2010 Re: Pre-approval - what good is it? 15Jan 29, 2010 9:22 pm In my experience as a paralegal working in conveyancing, pre-approvals aren't worth the paper they are written on. If your contract is subject to finance approval, if your finance approval is declined, you should get your deposit back. Any "reputable" real estate agent would not sign up a buyer to an unconditional contract based on a pre-approval. Re: Pre-approval - what good is it? 18Mar 10, 2010 4:10 am nope from my experience - pre approval is based on the information u supply them - an informal yes we will lend conditional approval is where they take more time and look into all the information you have provided/your situation etc etc and tell u that they will lend u x amount of $$ Built with RedInk Custom 5000 Key Handover 15/12/2009 Re: Pre-approval - what good is it? 19Mar 10, 2010 9:39 am ref_kt nope from my experience - pre approval is based on the information u supply them - an informal yes we will lend conditional approval is where they take more time and look into all the information you have provided/your situation etc etc and tell u that they will lend u x amount of $$ Thanks ref_kt. I'm actually at ease with that hehe Re: Pre-approval - what good is it? 20Mar 12, 2010 12:02 am Not all pre-approvals are useless. It depends on the lender you use. For example some lenders we use, such as Bankwest, only electronically assess pre-approval applications. An assessor doesn't even look at the supporting documents. This type of pre-approval is not worth the paper it is printed on. Some other lenders such as CBA will fully assess a pre-approval application (through the broker channel anyway). Even if the loan is subject to mortgage insurance a CBA pre-approval is strong since CBA have a delegated underwriting authority to approve most loans of up to $1M on behalf of LMI. Cheers Patrick O'Brien 1 2989 Hi Minho I have heaps of experience in Ku-ring-gai with both DAs and CDC ( this is the main area we build in). DA's are taking 12-18months and CDC's we have been doing… 1 3162 We've had the offer of a short term tenant whilst waiting for CDC/DA home approval and demolition for our knock down rebuild. It would achieve a pretty low rent as it's… 0 13752 |