95% lend mortgage insurance

[tambourineman]

My wife and I have found a house. We are providing 5% deposit by way of genuine savings (we have provided the bank with statements going back to August last year). We both have a solid work history and good combined income $160k plus (we are borrowing around 370k).

As a condition of sale we have got the vendor to fund stamp duty.

We have put an application up with Bankwest who we banked with a number of years before switching to Westpac (Westpac are aware we are borrowing through Bankwest and the local Branch Manager has phoned me twice trying to get me to put the loan through them). The loan has been 'conditionally' approved with Bankwest subject to valuation and LMI.

I am worried that the LMI is going to shut us down, I understand they are quite strict and although we have no bad credit listings we have had a few enquiries on our credit file – from what I have read on their website even a few enquiries can weaken an application. My concern is that if we put an app thru Westpac concurrently it will make it worse.

Questions I have are:

1. Has anybody gone to two separate banks for approval at the same time?
2. Does anybody know who Westpac use for LMI? I understand Bankwest use QBE. Which out of Genworth and QBE are more leniant?
3. Anybody had a loan approved in similiar circumstances recently? ie 95% lend with exact savings etc. Who did you use?
4. Which banks do their own inhouse LMI and done go external? I have heard CBA do it.

Appreciate any thoughts.

 

[Jamie M]

Another hit to the file right now won't do you any favours.

Sounds like you're close with Bankwest - why not just wait it out a little longer for the response from LMI? Did you provide explanations for the recent hits to the file?

When you say it's gone conditional, do you know if it's actually been assessed or is this something that was conveyed to you as soon as the application was submitted? If the latter, then it's just the result of their online credit scoring and you still have a while to go.

Cheers

Jamie

 

[Peter_Tersteeg]

1. Has anybody gone to two separate banks for approval at the same time?
2. Does anybody know who Westpac use for LMI? I understand Bankwest use QBE. Which out of Genworth and QBE are more leniant?
3. Anybody had a loan approved in similiar circumstances recently? ie 95% lend with exact savings etc. Who did you use?
4. Which banks do their own inhouse LMI and done go external? I have heard CBA do it.

1. Two banks at the same time happens all the time. It requires a bit of coordination and management but it's a big deal.

2. Westpac will often tell you that they have their own LMI, but ultimately it's underwritten by Genworth. I wouldn't say that one is more leniant that the other, but they do have some different policies which can present challenges or help you, depending on the circumstances of the deal.

3. I've gotten plenty of loans approved under these circumstances, but realistically if you're relying on a 95% lend with a lot of credit enquiries, you do have a few things to be worried about. It's not exactly a straight forward deal.

4. Each of the major banks and quite a few second tier banks have their own inhouse approval of LMI. This means that if the application falls within certain parameters, they can sign it off themselves and don't have to send it to the insurrer for final approval. My experience is that when it falls out of those parameters and does need to go to the insurrer for final approval, your chances of the loan being rejected are very high.

Looking at the very limited information provided, it appears that your application is acheiveable. The loan amount is not particularly large and your income is probably more than enough. If you've had more than 4 recent credit enquiries you could be in trouble but it can be worked with.

For general reference, avoid 95% LVRs if possible. I've got no problem with 90%, but at 95% my feeling is they actively look for reasons not to do the deal (I'm sure that's not the policy, but it feels that way sometimes).

Don't ever do a 95% deal without a finance clause, and for what it's worth, but BankWest pre-approval is worth less than a roll of toilet paper.

 

[tambourineman]

Thanks,

All up 8 enquiries over the last six months, three of these were for pre-approvals with Bankwest for different amounts (I dont understand why they need to continually access your credit file if you change the amount).

No defaults.

Existing credit facility with BW in good standing.

But I have a feeling the enquiries will hurt us. The others were for a personal loan which we were intending to use to fund the stamp duty on a different deal but withdrew from the sale, so they are isted as applications but weren't pursued.

I have explained the situation to the bank manager at Westpac and she is confident but I dont want to risk the deal with Bankwest by having another hit on my file during the application process.

I find this issue with credit enquiries a little confounding - how are you supposed to know where you stand without applying fr these loans, but I guess there is no point in complaining about it.

Are CBA any better? I understand they do quick approvals and offer inhouse LMI.

We are keen to progress the deal, we have had this fall over for us a couple of years ago due to a low valuation - it is getting frustrating.

 

[buzzlightyear]

.....If you've had more than 4 recent credit enquiries you could be in trouble but it can be worked with.......

What's recent?

 

[Peter_Tersteeg]

Don't even bother putting your application to CBA. 8 enquiries in 6 months is about double their tollerance limit. To be honest this is an extreme amount of enquiries, especially with a single bank. I'd say your best shot at this point is with BankWest. At least they know what's been going on.

Take a look at credit enquiries from a lenders risk perspective. What does it say about a person if they're continually applying for credit. Another lender doesn't know if it was approved or not. What they start to suspect is you're a serial credit junkie and a bad risk.

I've gotta ask, why did you bother getting one pre-approval after another? Even if you decided each time you needed a higher amount, your broker or lending manager should have been able to give you certainty around this without lodging another pre-approval.

Secondly, the BankWest pre-approval is usually purely system generated. The applicaiton does not appear before a credit assessor or a mortgage insurer, it's purely computer generated and the only person who looks at it is usually the person entering the data (who has no decidion making ability). BankWest is not the lender you visit if you want a worthwhile pre-approval.

Your strongest option is to simply continue to work with BankWest. Don't do anything with any other lender until you know that outcome.

If that fails, you could look to another lender, but your chances of success would be diminishing very quickly. You should then consider simply doing nothing for 12 months before applying for credit cards, loans, pre-approval, mobile phones, or anything else at all that will appear on your credit report.

I hate to say it, but I don't think you've managed this process effectively. Trying to worth with two lenders in a 95% lend situation is very tricky. Home loan application management is a lot more than filling out a form and supplying some payslips. I would suggest that if you're going to involve multiple lenders, you need to get a good broker to manage the process for you.

 

[Rolf Latham]

Thanks,

All up 8 enquiries over the last six months, three of these were for pre-approvals with Bankwest for different amounts (I dont understand why they need to continually access your credit file if you change the amount).

No defaults.

Existing credit facility with BW in good standing.

But I have a feeling the enquiries will hurt us. The others were for a personal loan which we were intending to use to fund the stamp duty on a different deal but withdrew from the sale, so they are isted as applications but weren't pursued.

I have explained the situation to the bank manager at Westpac and she is confident but I dont want to risk the deal with Bankwest by having another hit on my file during the application process.

I find this issue with credit enquiries a little confounding - how are you supposed to know where you stand without applying fr these loans, but I guess there is no point in complaining about it.

Are CBA any better? I understand they do quick approvals and offer inhouse LMI.

We are keen to progress the deal, we have had this fall over for us a couple of years ago due to a low valuation - it is getting frustrating.

Hiya

I'm not going to be much help here........

Bwa would be the last place I would go for a marginal deal like this....
......
Your possible undoing could be the vendor rebate........

Any file or lmi assessor doing their job properly will usually pick this one up.

If not, then the valuer usually will if u have a special condition protecting your interest

Certainly, I would pull up stumps and let bwa and be do their work before making this worse.

As dumb as it sounds rams via wlmi and ge seem to have a looser underwriter than wbc lmi with ge

Fingers crossed

Ta
rolf

 

[alexlee]

I find this issue with credit enquiries a little confounding - how are you supposed to know where you stand without applying fr these loans, but I guess there is no point in complaining about it.

That's what a mortgage broker who understands the issues with multiple credit applications is for. They would do an assessment without actually doing an application. In any case, why would you keep applying for higher amounts? Surely you would just ask for the most they would lend subject to valuation and LMI, and work down from there. How did that process actually go? Did you ask the bank 'can I borrow 200k? Well, how about 250k? Would you go up to 300k?'

We are keen to progress the deal, we have had this fall over for us a couple of years ago due to a low valuation - it is getting frustrating.

You make 160k and only have savings of 20k. Are you sure you want to do this with no buffer at 95% LVR with part vendor financing?

 

[Aaron_C]

Peter's hit the nail on the head. Stick with Bankwest because they've basically fried your credit file for anyone else especially for a 95% lend. I hope you've learned now not to bother with pre-approvals because they are worthless.

 

[Rolf Latham]

I hope you've learned now not to bother with pre-approvals because they are worthless.

Some are .....................

Some are reliable

Much depends on how the transaction is set uo and processed.

BWA is a useless piece of junk, for anything that requires LMI, since they dont approve their own LMI, NOR will they generally send the request to LMI

some specific exceptions are

NAB direct
CBA
WBC where you have forced a credit approval
Suncorp
AMP
ANZ, though u need to make sure its been to their LMI people

And I am sure there a bunch of others

SLight Tangent.............

This thread is a really good example of where the NCCP has partially failed what it set out to do............ credit protection consists of more than fees and charges, and double negative jibberish about affordability and suitability.

.............how is a borrower to know what they can act in reliance of a preapproval when going to an auction, and

.............how is a borrower to know that the multiple and excessive enquiries actually hurt them. I have not seen ONE lender privacy act that states this OBVIOUS fact


ta

rolf

 

[Doovalacky]

I find this issue with credit enquiries a little confounding - how are you supposed to know where you stand without applying fr these loans, but I guess there is no point in complaining about it.

Pre approvals are not worth a great deal.
What it is designed for in my opinion is to give you a working budget.
You can borrow up to X with X deposit and we will probably approve it.
If you go over X you will need LMI. Depending of course the valuation of the purchase. If you go over X you have no chance...

Next time get pre-approval for the maximum amount. Then put in your offer subject to finance on what you find that meets or is below those limits.
There are other ways of doing it, such as line of credits against existing assets but the above is probably the simplest.

Auction's are something I have always skipped for the very reason Rolf mentions.

 

[tambourineman]

That's what a mortgage broker who understands the issues with multiple credit applications is for. They would do an assessment without actually doing an application. In any case, why would you keep applying for higher amounts? Surely you would just ask for the most they would lend subject to valuation and LMI, and work down from there. How did that process actually go? Did you ask the bank 'can I borrow 200k? Well, how about 250k? Would you go up to 300k?'



You make 160k and only have savings of 20k. Are you sure you want to do this with no buffer at 95% LVR with part vendor financing?

Well you see, it was the broker that managed the first application with Bankwest. When I obtained the pre-approval, Bankwest ran a credit check (I have the file) and I informed the Broker that I already had the pre-approval and that they have already ran a credit check, when the Broker submitted the application during the so called 'pre-approval' period, they did it again. We then withdrew from the sale (the loan was not declined). It has been three months, so I needed to obtain a pre-approval on the new purchase, credit check again. The Bank said because this house was for a different amount, it needed to be a new application, despite the pre-approval being for upto $850k and the purchase in both cases being half of the 'pre-approved amount'. If the Broker had of actually been proactive he would have discussed this with the Bank before submitting the application.

Who cares if you apply for credit? With the amount of competition in the market for power, phones, banks etc people are always shopping around for the best deal. People dont repay their loans because they lose their jobs or simply can't service it, it has nothing to do with making credit enquiries.

As for Westpac, believe it or not, the branch manager has been chasing me, I didnt approach them. They know I am fishing for a loan elsewhere.

In terms of the vendor financing, vendor is already taking a 25k haircut on the listed price AND is paying the stamp duty.

By the way thankyou for the advice, I was planning to see through the application with BankWest - they have seen my credit file and I have been in regular contact with the HLM who see's no problem with the application at the moment other than the val. If that fails I will consider Westpac and if that doesnt work, pull my line out and try again further down the track.

 

[Rolf Latham]

Who cares if you apply for credit? With the amount of competition in the market for power, phones, banks etc people are always shopping around for the best deal. People dont repay their loans because they lose their jobs or simply can't service it, it has nothing to do with making credit enquiries.

See, the issue here is that the credit scoring engines are generally more reliable than humans in picking bad debt when looking at large volumes of applications.

One major predictor of a borrower going bad is a "large" number of credit enquiries, fact.

I dont like it either..............for I have a good nose for what is and isnt a deal, but the rules of the credit scoring stuff are there, and thats that. If I want to have a business that works, I need to work within those confines.


ta

rolf

 

[alexlee]

Well you see, it was the broker that managed the first application with Bankwest. When I obtained the pre-approval, Bankwest ran a credit check (I have the file) and I informed the Broker that I already had the pre-approval and that they have already ran a credit check, when the Broker submitted the application during the so called 'pre-approval' period, they did it again. We then withdrew from the sale (the loan was not declined). It has been three months, so I needed to obtain a pre-approval on the new purchase, credit check again. The Bank said because this house was for a different amount, it needed to be a new application, despite the pre-approval being for upto $850k and the purchase in both cases being half of the 'pre-approved amount'. If the Broker had of actually been proactive he would have discussed this with the Bank before submitting the application.

The application should never have been necessary. If your numbers could service 850k, for the amount you're wanting to borrow it would hinge only on LMI and valuation. Which is big, but shouldn't have needed multiple credit applications.

Who cares if you apply for credit? With the amount of competition in the market for power, phones, banks etc people are always shopping around for the best deal. People dont repay their loans because they lose their jobs or simply can't service it, it has nothing to do with making credit enquiries.

Are credit enquiries relevant? Clearly, enough that the banks have built it into their process. Is it fair? Maybe not, but that's how it is. Your opinion of credit enquiries counts for nothing. You're better off learning how the bank system actually works?

As for Westpac, believe it or not, the branch manager has been chasing me, I didnt approach them. They know I am fishing for a loan elsewhere.

You called them, they called you, why is this relevant? The manager wants business. Doesn't mean you'll get approved.

In terms of the vendor financing, vendor is already taking a 25k haircut on the listed price AND is paying the stamp duty.

That doesn't exactly help you if rates go up or the place needs repairs. Are there any circumstances that led to you have such low savings for your level of pay?

 

[tambourineman]

The application should never have been necessary. If your numbers could service 850k, for the amount you're wanting to borrow it would hinge only on LMI and valuation. Which is big, but shouldn't have needed multiple credit applications.



Are credit enquiries relevant? Maybe not, but the banks do care. Is that fair? In a lot of cases, no. But that's how it is.





That doesn't exactly help you if rates go up or the place needs repairs. Are there any circumstances that led to you have such low savings for your level of pay?

In response to the last part of the post, I have been with the same company for four years but was promoted twice in the past twelve months and my wife returned to the workforce 13 months ago. We have saved that amount over a period of 12 months.

 

[Aaron_C]

tambourineman it looks like your broker and Bankwest ****ed you up, to be frank.

 

[tambourineman]

thanks for the good news.

See how we go next week, if it doesnt work out it doesnt work out. I rechecked the file, it was 7 enquiries in 6 months, 3 with bankwest, 1 for when I changed banks in December (changed credit card over etc which was approved and declared in my application) and some others.

I am surprised that this is considered a high number of enquiries but will know for the future thanks.

 

[luckyone]

thanks for the good news.

See how we go next week, if it doesnt work out it doesnt work out. I rechecked the file, it was 7 enquiries in 6 months, 3 with bankwest, 1 for when I changed banks in December (changed credit card over etc which was approved and declared in my application) and some others.

I am surprised that this is considered a high number of enquiries but will know for the future thanks.

I agree. The system is stupid. I got burned on my first purchase because of the high number of enquiries on my credit file. I sincerely hope the same thing doesn't happen to you.

 

[Peter_Tersteeg]

I understand that you wanted a pre-approval the first time. If you've received the first pre-approval, subsiquent ones are completely unnecessary as long as nothing dramatic has changed in your circumstances or externally. The first pre-approval already told you what you needed to know. Even if it expires, subsiquent pre-approvals don't give you any additional information.

There's a very good point in all this. Pre-approvals are more to give you information, not the bank. If it fails it can give you feedback on what you need to fix. If it succeeds another one wont really tell you anything new.

I've currently got pre-approval in progress for a client. Most of the application is straight forward, but there are some very unusual aspects to her income on which the application depends. A pre-approval will give us information to what limit the bank will accept her income. If a future property is worth a bit more, it's not a problem because at that point I'll know how much income the bank will accept. If the pre-approval expires in 3 months, I'll still know what what's acceptable to the bank. Neither scenario requires a further pre-approval.


Additionally if your broker was worth their salt, they would have known that the BankWest pre-approval is totally worthless. They don't go to an assessor. Until an application has been verified by someone with credit decision authority, everything else is just an opinion. If a broker doesn't know this about BankWest, I'd question the value of their opinion in general.

Your Westpac manager chasing you for business don't really mean you've got a desireable application to the bank. It may also mean that she's got a quota to meet.

Finally, if anything with vendor finance gets disclosed to a mortgage insurer, it'll almost certainly get declined regardless of LVR, previous applications or other mitigating factors. Vendor finance and LMI don't mix.

 

[Rolf Latham]

Your Westpac manager chasing you for business don't really mean you've got a desireable application to the bank. It may also mean that she's got a quota to meet.

may ?

Knowing a few HFMs and Branchies I assure that it not a may

ta
rolf