Browse Forums Home Finance 1 Sep 10, 2010 4:53 pm Hi all. Hope someone can help... My partner and I are in the process of buying a unit off the plan with completion due this time next year. She is a contractor with a high hourly rate and i am a low income earner in casual employment. Two things will happen which will affect our ability to gain a mortgage for this project: 1. We are moving interstate early next year and my partner will have significantly lower earnings due to having to "re-establish" her business in the new state, and; 2. We are getting married by the end of this year which allows the banks to apparently perceive me as a "dependent" on her due to my low income and unstable work history. Given my partners previous years tax returns we are likely to gain pre-approval, however given the ensuing changes in our lives, we anticipate the banks rejecting our loan application come pre-settlement. Has anyone been in a similar circumstance? And is there any way that we may be perceived by lenders as having separate non-mutually affecting incomes despite our impending marriage? Also, is it possible to put down a deposit and sign a contract without pre-approval? and what is a smart way to include a subject to finance clause in the contract, given we expect the banks to reject us come pre-settlement? Re: Buying off the plan with no pre-approval - is it wise? 2Sep 11, 2010 3:12 am I have to ask - if you are expecting the banks to reject you, how do you expect to get a loan? Personally even if I thought a loan would be approved (we did one of those 'check your borrowing power' calculators online), we still went to the bank to get a pre-approval estimate so we had something to work with. viewtopic.php?f=31&t=37229 - our Iris 4! Re: Buying off the plan with no pre-approval - is it wise? 3Sep 11, 2010 10:30 pm Buying off the plan, the developer will want to see that the bank has issued your pre-approval for the amount (normally you cant get unconditional at this stage), then you will sign the contracts (with or without a solicitor etc) and generally slap down a 10% deposit. Now depending on the clauses in the contract, if settlement comes and you can get finance but past settlement date, the developer can charge you interest as a delay penalty on settlement. If you basically back out of the deal, different developers have different penalties for breaking the contract but a common one is a 10% break fee (so now you are down 20% of the purchase price of the unit with nothing to show for it). In an ideal world, about 3 - 6 months before expected completition, you should see the bank to arrange unconditional finance to pay for the unit and the contract is completed. If you expect to be rejected for unconditional finance come settlement, then why go ahead with the purchase? At the very least you lose your deposit. But the actually penalty for it will be in the contract (so read and find out what it is before signing on the dotted line) and generally they wont accept a "subject to finance" clause being added to their contract - you can ask but they will simply say no and sell the unit to someone else. They are there to make money and the contract will be weighted in their favour. Re: Buying off the plan with no pre-approval - is it wise? 4Sep 14, 2010 10:38 am Holy moly! I can't believe you are even considering this. Even if you get pre-approval now, it is not worth the paper it's written on. You will probably need to submit updated financials, pay slips etc before settlement.With neither of you in stable full-time employment this may be a hard deal to get through unless you have a very large deposit. However, if you have a decent deposit it's almost always possible to a get a loan from somewhere - it just depends how much you're willing to pay for it. I don't know where you are, but I strongly suggest you find a GOOD independent mortgage broker and do not sign any off-the-plan contracts in the interim. Try the finance section of the forum at somersoft.com.au. Re: Buying off the plan with no pre-approval - is it wise? 5Sep 14, 2010 11:05 am I would be getting sound financial advise before commiting, given your variability in earning potential over the next few months. At the end of the day, then bank will do what it needs to ensure that its investments are protected. You need to do your own exercises to ensure the same - hope this gives you somethign to mull over. Suburbia is where the developer bulldozes out the trees, then names the streets after them. Re: Buying off the plan with no pre-approval - is it wise? 6Sep 14, 2010 7:40 pm This is a very dangerous move and I would suggest that you instead look at buying a normal property that is not off the plan. The reason for this is that because there is a chance you will not get finance approval, you really need the protection of a cooling off period or finance clause (depending on your state). This protection does not exist for sales via auction or that are off the plan. Every month we get one or two calls from people who have purchased off the plan that are waaaaay outside normal lending criteria and are almost certain to lose their deposit. It is really unfortunate and there is often very little we can do to help. We only recommend that you purchase an off the plan property if you are in a strong financial position, you shoudn't take the risk of losing your deposit. As for moving interstate that will pose a problem for some lenders due to a short term in your new employment. A clever credit assessor may notice that the move interstate would mean that your wife's business would need to restart, and may decline your loan / ask more questions because of this. Providing the right background notes or applying with a lender that does not do in depth credit assessments would likely solve this problem. We actually specialise in lending to contractors (mostly IT & mining) as well as casual employees, so I'll give you a little background on what the lending policies are for these areas: For casual employees the minimum time in your current job is 3 months with one lender, however for the vast majority they require you to be in your job for 12 months before they will take any of your income into account. For contractors it really depends on the type of contractor as there are PAYG contractors and contractors that operate via their own company / ABN. If she is the latter type then you may be able to get away with providing two years tax returns as proof of your income. One lender just requires evidence of the invoices she has received in the last 3 months or a copy of the contract if she is dealing with one company only. So again it is important to apply with the right lender. I would strongly recommend that you discuss this with your conveyancer so that you understand the risks of buying off the plan. It's a big risk to take, new legislation will change the banks lending guidelines on the 1/1/2011, you just can't be sure that you can get a loan in a years time! Re: Buying off the plan with no pre-approval - is it wise? 7Sep 22, 2010 1:36 pm thanks guys. youve definitely given me some food for thought. 1 2884 Hi Minho I have heaps of experience in Ku-ring-gai with both DAs and CDC ( this is the main area we build in). 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