Browse Forums Home Finance 1 Aug 28, 2011 10:56 pm Hi Guys, Hope someone here who knows a bit about what goes on behind the scenes with brokers. Currently have a mortgage with current house. Going for a new loan for house and land package. I put a deposit down for land on 14th August. My broker reckons I can service the loan. 5 days later I had all paper work the broker asked for. The list was too long! Anyways I gave the paperwork last weekend and the broker said she will take the file to her boss on Monday 22nd august. She then said it'll take about 2/3 weeks to get an answer for conditional approval. I get a call five days later from broker asking to me to call bank to organize to apply for loan top up so I can use it to put towards deposit for new house. Called the bank, they go no I need to get application submitted first and approved before I can access the top up amount. So that who experience was useless. Told my broker, then she goes I'll have a chat to my boss(guy who is handling my file). 10 mins later I get a call back from broker saying " everything is all good. My boss will be able to submit your application now". So my questions are: 1. Shouldnt they know Westpac's procedures? They are brokers! Why did they make me waste my time calling the bank when it wasn't need and when the bank so no, they end up submitting my application in the end? 2. Why has it taken a full 5 business days and they havnt even submitted my application to bank yet? My contract only has 2.5wks left before I need an answer... Sorry for the long post. Hope someone can be of assistance. T Re: New loan application 2Aug 29, 2011 1:13 pm Hi Investa, I work within a mortgage broking company so have a fairly good understanding of the process, although I am not a qualified mortgage broker myself. In short here are the answers to those questions: 1. Yes they should know the procedures, and who knows why they have asked you to do this...probably incompetence! 2. Does that mean 5 business days since you gave them all of the information? Because it should certainly have been submitted within 1 or 2 business days of receiving ALL of the required information. Sometimes they need to go back and forward discussing the deal with the bank before submission if it's not a straightforward deal, so it can take a bit longer. If that is not the case I would probably be kicking up a bit of a fuss. What you should do is communicate between your broker and conveyancer and let your conveyancer know as soon as possible if it's going to be too late by the time you get the approval. The conveyancer can then request an extension. Most vendors will be happy to extend as long as they still think there's a good chance of you actually getting the finance. Hope that helps! Re: New loan application 3Aug 29, 2011 2:09 pm Thanks for the reply position! That does help! Yes I gave them all documents required for full approval. It's too late to change brokers now but I know next time not to use these guys again. I also don't like the fact that I spoke to the chick who I thought I would be dealing with for whole application but once I signed the paper work, was then told some guy at head office will look after the file. Personally if I was going through a broker I would prefer to deal with only one person so when I ask questions I get a direct response straight away. T Re: New loan application 4Sep 15, 2011 6:27 pm Hi guys, just an update. I now have pre approval pending valuation of house and land! yay. but bank won't give me unconditional approval until they have builder's contract. This is going to take 12weeks plus with Henley? How are the developers going to approvel such a long extension for our land contract?? Is this normal what our broker and bank are doing? If anyone has been in a similar situtation or care to comment if this is the right way to do things? Im just a bit iffy with having to wait for months to get unconditional approval. What if we go through ahead with Henley and spend lots of hours then bank comes back and rejects our loan? My senario is borrow up to 90% of current home and putting deposit towards new house and land. LVR for new house and land is about 91%-92%. Re: New loan application 5Sep 19, 2011 10:40 am Hi Investa, By the sounds of it you are purchasing the Land and building separately as opposed to a 'house and land package'. With this in mind. The lending generally needs to be done as two different loans and subsequently 2 different applications in order to satisfy any finance clauses on the land purchase contract. If what you have described is correct and just the one application has been submitted for the ENTIRE amount of lending then you will need to see if the developer is willing to extend finance out until the building contract is finalised. This is because the bank requires a copy of the contract and the specifications in order to have a valuation completed. This is normally fine for a 'house and land' package as the contract is all in one. Normal practice for your scenario would be as follows: Lodge loan application 1 for the purchase of Land as a full application. This way a valuation can be conducted on the LAND alone based on the land purchase contract therefore unconditional approval can be achieved. This also means that settlement can be achieved in advance of the construction starting. Lodge loan application 2 for the construction as a preapproval (either as an 'increase' to loan 1 or as a stand alone separate account number). This way you can have your preapproval in place ready to go and the bank is fully aware of your intentions with regard to the land. This would be standard practice for situations such as yours whereby you have finance and settlement dates that are not identical for both the land and construction contracts. Your final question was "What if we go through ahead with Henley and spend lots of hours then the bank comes back and rejects our loan?"...... There are a number of factors involved in this question. I will disseminate them below for you: The scenario you have given us has you in Mortgage Insurance territory, involves Land and Construction with finance and settlement dates that are different and involves an equity release from your current home. You stated that the building contract and specifications will NOT be ready for at least 12 weeks. This MAY cause some concern in that a preapproval provided by a bank, particularly with mortgage insurance is generally only valid for 3 months (12 weeks). After that time either the details need to be 'updated' with all changes in your circumstances reflected OR a 'new' application be submitted for the construction portion. Which one of these depends on which lender you are with. ------- Esentially your scenario requires 3 different applications with 3 different approvals. 1) Equity release from your current property to be used (usually) towards the construction and land deposits. 2) Land lending to be fully approved based on the land value and contract alone (with notes covering that there is a second application in process for preapproval of construction) 3) A preapproval for construction (that will need to either be 'updated' or 'resubmitted' in 3 months time if the building contract takes longer) - (this would also have notes referencing back to the land loan) ... ... ... ... I hope this helps you out a little Investa. Certainly information that is easier explained in person by your broker or lender. The information and advice I have given you is based on the understanding of your circumstances derived from your posts. Without seeing further information or what the other broker has actually done it makes it hard to say whether what they are doing will 'work' or not. Regards, Trent Davidson Property Finance Consultant Residential Lending LJ Hooker Finance Brisbane North Credit Representative Number: 387283 under Australian Credit Licence:380270 Re: New loan application 6Sep 22, 2011 4:50 pm I liked our broker for the fact it was him and his business partner running the business so they didnt have a boss to consult to. He also did a lot of communication with our conveyencer and builder on our behalf as it is our first mortgage and home. He also explained everything even when he spoke directly to these parties. http://lindeman28.blogspot.com - Our building blog Re: New loan application 7Sep 24, 2011 7:54 pm Wow Trent that answers everything! My broker said she has tried to do it as sperate land loan and construction loan but bank wants it done this way... Maybe im in a higher risk category be cause of my senario. I have shared investments with my sister with two other properties and my gearing is high. Thanks for your input! 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 19455 Thanks for the response! However, it's have been sorted. But for others benefit here is what we had to do. Unfortunately, it's not straightforward. BCC washed their hands… 3 7258 Hi, you've probably already resolved this, however, Commbank will probably pay the funds to you after you send evidence the work is done regardless the change in the quotes. 1 35623 |