Do you think placing 10% deposit before valuation is that fool hardy?

[oneguy]

Signed and placed the 0.25%, and did NOT put a finance clause in although I did change the cooling off period from 5d to 7d.

Strata, B&P all look good.

Finance is still getting sorted, and with 3 days to go, valuer has not been. Now concerned that my cooling off period will be over before valuation done and finance are in place.

I'm going to try to extend the cooling off period, but realise it may be difficult to do that at this point in time. Will try though.

But assuming they won't budge extending the cooling off period, and knowing that I'm confident of eventually getting finance approved before the 6 week settlement (no debt, assets in excess of twice the purchase price etc), should I just place the 10% deposit? or walk away and start looking elsewhere.

It's my understanding that in the worst case scenario, where the valuation is say 30K less than my purchase price, i can just borrow for the valuation price, and I can make up the difference (although it does ring alarm bells if the valuation is indeed less than the purchase price).

In future, I'd be adding finance clause in, but in this situation, if i can't get the cooling off period shifted a couple of days, what would you do?

I'm inclined to place my 10% deposit (approx 50K),


Advise appreciated.

oneguy

 

[boomtown]

Never back yourself into a corner Tell the vendor the truth and ask for an extension. If they don't give it and you don't have finance yet then walk away. The deal of a lifetime comes around about once a week.

 

[Peter_Tersteeg]

You're potentially a little hopeful trying to get finance approved within 7 days right now. A few banks can do it, but it would be close with most.

The process also varies depending on the lender and the channel through which the loan was submitted. In many cases, the valuation may not have been ordered yet, but will probably be ordered around day 5.

Finance approval is probably more dependant on the affordability calculation than anything else (give your description of your circumstances). Your post doesn't really give any hints as to how good this might be, but hopefully your banker or broker knows their stuff and it'll be fine, or they would have already indicated that there's a problem.

On balance, I'd talk to whoever's helping you and ask for feedback on where the loan is in the overall process. Is there a problem, or is it simply taking time to get through the system?

 

[Rolf Latham]

Signed and placed the 0.25%, and did NOT put a finance clause in although I did change the cooling off period from 5d to 7d.

Strata, B&P all look good.

Finance is still getting sorted, and with 3 days to go, valuer has not been. Now concerned that my cooling off period will be over before valuation done and finance are in place.

I'm going to try to extend the cooling off period, but realise it may be difficult to do that at this point in time. Will try though.

But assuming they won't budge extending the cooling off period, and knowing that I'm confident of eventually getting finance approved before the 6 week settlement (no debt, assets in excess of twice the purchase price etc), should I just place the 10% deposit? or walk away and start looking elsewhere.

It's my understanding that in the worst case scenario, where the valuation is say 30K less than my purchase price, i can just borrow for the valuation price, and I can make up the difference (although it does ring alarm bells if the valuation is indeed less than the purchase price).

In future, I'd be adding finance clause in, but in this situation, if i can't get the cooling off period shifted a couple of days, what would you do?

I'm inclined to place my 10% deposit (approx 50K),


Advise appreciated.

oneguy

Does it need a valuation ?

lender ? and Loan to value ratio pls

while the cooling off is in place ur max loss is .25

ta
rolf

 

[oneguy]

On balance, I'd talk to whoever's helping you and ask for feedback on where the loan is in the overall process. Is there a problem, or is it simply taking time to get through the system?

Hi Peter, no problems, just taken a bit longer to go through the system, and yes in future will be asking for a longer cooling off period when making the conditional offer.

 

[oneguy]

Never back yourself into a corner Tell the vendor the truth and ask for an extension. If they don't give it and you don't have finance yet then walk away. The deal of a lifetime comes around about once a week.

Thanks, hearing yours and others advise is making me lean towards not acting in haste here.

 

[oneguy]

Does it need a valuation ?

lender ? and Loan to value ratio pls

while the cooling off is in place ur max loss is .25

ta
rolf

AMP lender. LVR of 90%

Yeh, comfortable with losing the .25% during cooling off in a worse case scenario, although understandably not comfortable with 50K with a 10% deposit.

I'm just thinking, if my DD says it's OK, Strata Report is OK, B&P is OK, and finance i'm confident WILL BE OK, is there realistically anything else that will put a stop to proceeding to settlement? If not, my 'initial' thoughts were to proceed with the 50K 10% deposit. Beginning to see the light here though, and thinking perhaps to be less hasty.

 

[alexlee]

I'm just thinking, if my DD says it's OK, Strata Report is OK, B&P is OK, and finance i'm confident WILL BE OK, is there realistically anything else that will put a stop to proceeding to settlement? If not, my 'initial' thoughts were to proceed with the 50K 10% deposit. Beginning to see the light here though, and thinking perhaps to be less hasty.

Why are you so confident your finance will be ok? Your serviceability might be, but who knows about valuation?

 

[oneguy]

Why are you so confident your finance will be ok? Your serviceability might be, but who knows about valuation?

Fair question. I'm just saying, even if the valuation comes out less than my purchase price, then I'd be able to cover the shortfall between the valuation amount and purchase price.

 

[Rolf Latham]

Fair question. I'm just saying, even if the valuation comes out less than my purchase price, then I'd be able to cover the shortfall between the valuation amount and purchase price.

so dont stress : )

 

[Peter_Tersteeg]

AMPs servicing is very generous for investors with multiple properties, so I'd say you don't have any issues here (and if you do, you're in real trouble!)

AMP also allows upfront valuations ordered by brokers. Follow up with your broker to ensure it's been ordered. There is a chance that no valuation will be required (although I'd have predicted a full valuation for a 90% loan).

 

[Jacque]

so dont stress : )

Ditto

Though it's rare for a valuation to come back lower than purchase price (usually only on unusual/difficult to value props or OTP/new) if you have the shortfall and are willing to use it, then I don't see a problem. If you're confident that you didn't overpay and are happy with the price then it's all good. Let us know how you go

 

[Truly Exotic]

You're potentially a little hopeful trying to get finance approved within 7 days right now. A few banks can do it, but it would be close with most.

The process also varies depending on the lender and the channel through which the loan was submitted. In many cases, the valuation may not have been ordered yet, but will probably be ordered around day 5.

PT, can you explain something to me, im not from NSW, and my recent dealings have uncovered that basically only NSW dont have finance clauses or vendors are reluctant to accept,

standard cooling off is 5-7 days (I believe)

in other states, you generally have around 2-3 weeks for a finance clause,

most lenders dont even know your name within the 5-7 days with very little hope of getting finance approval!

 

[matto_]

I didn't think finance clause was to cover validation from bank? I thought this was done later in the settlement process as opposed to the first couple of days.

 

[Terry_w]

Finance clauses in NSW are not so common. But since you have exchanged already you should seriously consider asking for an extension of the cooling off period or pull out. It is very dangerous to enter a contract when you are not sure if you can complete.

 

[oneguy]

I didn't think finance clause was to cover validation from bank? I thought this was done later in the settlement process as opposed to the first couple of days.

My lender (and I imagine most others) want to do the valuation first before granting FORMAL approval. As such, I 'think' the finance clause does cover valuation.

Other more knowledgable folks here can confirm/deny this, but that's my understanding.

 

[Aaron_C]

My lender (and I imagine most others) want to do the valuation first before granting FORMAL approval. As such, I 'think' the finance clause does cover valuation.

Other more knowledgable folks here can confirm/deny this, but that's my understanding.

Usually lenders have two stages of approval:
Conditional Approval; and
Unconditional Approval.

Conditional approval is usually given subject to valuation, verification of income etc.
Unconditional approval (the more important one) has no other conditions attached and is the approval you need for a finance clause.

 

[Peter_Tersteeg]

PT, can you explain something to me, im not from NSW, and my recent dealings have uncovered that basically only NSW dont have finance clauses or vendors are reluctant to accept,

standard cooling off is 5-7 days (I believe)

in other states, you generally have around 2-3 weeks for a finance clause,

most lenders dont even know your name within the 5-7 days with very little hope of getting finance approval!

In NSW they generally don't exchange contracts until all outstanding conditions have been met. Exchange occurs when contract are signed and a formal deposit is handed over (a smaller 'holding deposit' is often given with the offer).

Regardless of the timeframe of cooling off, or the vendors desire to exchange earlier, finance still takes around 2 weeks. AMP aren't exactly known for their speedy approvals at the moment either.

Realistically everything is almost certainly going to be fine, but I still wouldn't exchange until your finance is unconditional.

 

[The Y-man]

Just slightly off track - wouldn't almost EVERY OTP buyer be in that situation of putting down the deposit and signing contract prior to val?

The Y-man

 

[oneguy]

Hi guys, just wanted to update you. Was able to get an extension to the cooling off period and got the unconditional approval from AMP in that period. Thanks for your advise and feedback. Helped keep me sane while waiting.