Browse Forums Home Finance 1 Mar 24, 2011 9:28 am Hello! Has anybody heard of a situation where their finance application was declined because of LMI being declined due to the HOUSE being too high a risk and in need of too much repair? (husband is a builder, house is really cheap ($200K on land valued at $170K) & we're definitely buying worst house best street). I really don't understand and in true bank style, I can't get a hold of the bank or a reply to my emails for a straight answer. We were declined by BankWest's external LMI provider who advised us to go to CBA/Suncorp because they do their own underwriting. As we speak the loan is with CBA's risk assessors and we will find out today hopefully (finance is due today). At this point I don't really care what the outcome is (the fact that someone doesn't want to insure a loan on the house makes the rejection a little easier to swallow). From what I can gather, it's just this particular house that they don't want to insure the mortgage on, not me, but I haven't ever heard of this before? Also, I'm concerned about the declined home loan applications on my credit file when we find another house? Thanks heaps! Amy Re: Loan declined due to HOUSE being high risk? 2Mar 24, 2011 11:47 am At this stage your Credit file doesn't show whether the loan was approved or declined - only that you applied for a loan. They are trying to change the Credit file system to show declined / approved / offer taken up however still a work in progress. What is your LVR? Obviously you are over 80% otherwise LMI wouldn't come into the equation. The other thing that will be setting off alarm bells is that the house is in a bad state and your husband is a builder -DING DING the Bank will be going - Owner Builder!! This is a big no no for LMI. OB situations normally are only 60-80% LVR (depending on the situation). Is the house liveable? As is the way it stands now? Some things are worth waiting for. Re: Loan declined due to HOUSE being high risk? 3Mar 25, 2011 6:34 am Yes BankWest uses QBE as their LMI provider and unlike many other lenders they do not have open policy. Note however that CBA may not be that helpful in this case either. They have a DUA with Genworth (their LMI provider) however one of the conditions of the DUA is that if there are any high risk ratings on the valuation then the loan is outside their DUA and is referred to Genworth for assessment. Genworth will consider this on a case by case basis depending on the overall strength of your application. If you are not in a major city, you are borrowing 90% or more and there are high risk ratings on the valuation then from my experience there is a good chance your loan would be declined. Also what Kyton has said is correct. If your husband is a licensed builder and is going to build the house himself at a later date then this is considered to be owner builder. Very few lenders accept this type of loan, and most limit it to 80% of the land value plus cost of construction. There are two ways you could try to get approved if CBA declines your application:
Good luck! Re: Loan declined due to HOUSE being high risk? 4Mar 25, 2011 8:53 am Thanks so much for replying. we have about 85% LVR and they did end up declining. As for owner/builder the loan is only in my name, I just thought I'd put it out there as to why I was considering buying such a crappy house For the record, we did get declined by CBA, and they have assured me that it is the house, and not me that is the problem, I did have a bit of a complex haha. On the plus side, it appears that the property prices have dropped even further in the 14 days we were under contract, so we will be back to the drawing board! Thanks again Re: Loan declined due to HOUSE being high risk? 5Mar 30, 2011 12:08 am High risk house is a common decline reason for the LMI providers; especially for rural areas, fire dmg homes, flood prone area and area prone to extreme conditions; this "offset/risk" can normally be avoid if the LVR is under a certain level .... In your case if you have another IP or your own PPOR and your wiling to cross the securities to one lender; and the "total" LVR is under 80% there is a high chance it may be acceptable. ( depending on the chosen lender) Regards Michael Michael Chan | Australia wide Mortgage Broker Michael@ShapeHomeLoans.com.au | 1300 74 5626 | Fax: 02 8212 8909 http://www.ShapeHomeLoans.com.au Re: Loan declined due to HOUSE being high risk? 6Apr 01, 2011 8:55 pm Must be a pretty crappy house Onto the next one. I suggest you go with a lender that allows upfront valuation next time if you plan to buy a similar style property. That way you can suss out the valuation report before applying / burning your credit file anymore. Multiple enquiries is a killer. The valuation report generally has 5 risk ratings that the Valuer scores from 1 to 5. Any 5 rating or two 4's is an lmi killer. Cheers, Marty The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19105 My garage door has started playing up recently. Sometimes (and getting more frequent) when I press the button to open it, it wont. The motor is an ATA GD0-6V3. Red and… 0 2674 Being an owner builder is no walk in the park. It’s a challenging endeavour that requires dedication and hard… 0 10004 |