About a backup plan when applying for finance.

[ThomasAJ]

I am not applying right now - I want to file this under 'research'.

So the usual scenario is
1. Find property
2. Offer made/accepted subject to finance
3. Provide financials to lender
4. Pray the credit person didn't have a fight with spouse that day...

Yes you can get pre-approval but even that has a sunset date and I have been looking for a particular type of property for months now (please let's not get hung up on this aspect) and I suspect I will be looking for another 6 months at least.

...back to the step 4.

Does anyone employ some sort of backup finance application strategy when they put in their first application? Does anyone put in 2 or 3 apps at or near the same time. (Let's not worry about extra costs involved)

 

[Propertunity]

Does anyone employ some sort of backup finance application strategy when they put in their first application?

Yes, use a mortgage broker who knows what he/she is doing.

Does anyone put in 2 or 3 apps at or near the same time. (Let's not worry about extra costs involved)

NO! It's not the costs you worry about, it is the additional hits on your credit file = bad for getting anything approved.

 

[Aaron_C]

Do not apply for finance through multiple banks at the same time. You will regret it.

 

[Mick C]

Does anyone employ some sort of backup finance application strategy when they put in their first application?

Even thought you may not be buying in the next 6 month, or longer; you will find most brokers and branch mobile lenders are happy to help a "potential" client set up a financial plan and show them ways to clean up their file so it's more bank friendly - it's all about planning and knowing what to do and expect.



Regards
Michael

 

[MattKenworthy]

Yes, use a mortgage broker who knows what he/she is doing.

This - any broker who knows what he/she is doing will be able to ensure your application is submitted to a lender where it has a high probability of success.

 

[Peter_Tersteeg]

Does anyone employ some sort of backup finance application strategy when they put in their first application? Does anyone put in 2 or 3 apps at or near the same time. (Let's not worry about extra costs involved)

Definitely don't make multiple loan applications. I'd even advise against talking to multiple banks as each time you do, it results in multiple hits to your credit report. Lenders don't like to see too much activity and some will reject your loan out of hand if there's too much.

It can look as if you're shopping all the banks to see who'll give you the money and it essentially makes a lender thing, why don't the other guys want to help them?


The advantage of using a broker is we have a range of options at our disposal. Brokers should also have a good understanding of the lenders credit policy so we can determine up front which lender will or will not accept your loan application.

A good broker will also let you know if there's anything that can be done to improve your chances to mitigate the risk of a failed application. If absolutely necessary they'll also have alternate options available if disaster does strike.

 

[The Y-man]

Does anyone employ some sort of backup finance application strategy when they put in their first application? Does anyone put in 2 or 3 apps at or near the same time. (Let's not worry about extra costs involved)

We generally went unconditional, BUT had a good 20% of the purchase price available as "backup" in relatively liquid assets such as cash, shares and managed funds which we could liquidate if things went pearshaped.

The good thing is, you don't need to "grow" this backup unless you have a need to call upon it.

The Y-man

 

[Rolf Latham]

Hi Tom


I personally prefer step one to be ..........what finance is available ( or at least theoretically available) with the resources I have, and then build my strategy around that ?

Starting with a property is often not going to end well, and thats where you would need a back up plan

ta
rolf

 

[Ergophobia]

Hi Tom


I personally prefer step one to be ..........what finance is available ( or at least theoretically available) with the resources I have, and then build my strategy around that ?

Starting with a property is often not going to end well, and thats where you would need a back up plan

ta
rolf

+1

I like to get pre-approval... even though your search is probably going to take longer, as long as your circumstances havent changed, approval should be a sure thing.

 

[pennyk]

+1

I like to get pre-approval... even though your search is probably going to take longer, as long as your circumstances havent changed, approval should be a sure thing.

it will usually also be subject to valuation.. this has recently caused us problems, with the valuation coming in 20% lower than we expected it would. we have had to go to a different bank than originally approved through

 

[Aaron_C]

+1

I like to get pre-approval... even though your search is probably going to take longer, as long as your circumstances havent changed, approval should be a sure thing.

Pre-approval doesn't mean anything really Ergophobia. It's subject to so many conditions such as valuation, verification of income, clean credit check blah blah blah that the only useful thing from it is a very rough indication of how much you can afford to borrow.

 

[Bradsdad]

I am not applying right now - I want to file this under 'research'.

So the usual scenario is
1. Find property
2. Offer made/accepted subject to finance
3. Provide financials to lender
4. Pray the credit person didn't have a fight with spouse that day...

I would look at it this way.

1. Speak to Lender/Broker 1st
2. Decide on area/s that meet parameters set out in step 1.
3. Do homework on Property values in area (ref step 2)
4. Look at properties and locate a suitable one based on 2 and 3
5. Make offer subject to finance and building/pest inspection
6. Get copy of contract to legal rep/conveyancing company (could be done prior to step 5)
7. Provide details to broker/lender as requested. (best to start collating after step 1 and keep updated)
8. Hopefully no need for prayer.

These are by no way the only things you will be doing but a more accurate summary than originally posted IMO

[/quote]Yes you can get pre-approval but even that has a sunset date and I have been looking for a particular type of property for months now (please let's not get hung up on this aspect) and I suspect I will be looking for another 6 months at least.[/quote]

As already mentioned, pre-approvals don't carry much weight most of the time. I see them as a tool used by brokers/lenders to get you in bed with them after initial meeting. Many clients can't be bothered looking elsewhere after they have this "magical" pre-approval in their hand.

Does anyone employ some sort of backup finance application strategy when they put in their first application? Does anyone put in 2 or 3 apps at or near the same time. (Let's not worry about extra costs involved)

Again, as mentioned, multiple credit inquiries can adversely affect an application. If the original steps are followed there should be little left to chance. By having the finance clause in the contract you can always walk should finance not be forthcoming.


Regards
Steve