Given pre-approval, then declined at final loan paperwork

Talk about being super cranky!

I've been working with a financial planner, buyer's agent, and mortgage broker for months - and we'd finally found the ideal property, where all the numbers stacked up, and it was all 'workable'. I even had pre-approval for the amount I knew I was looking to spend - no problems there.:)

But, after now spending money on the deposit, and the pest/building inspections etc, and trying to finalise the finance, the bank has knocked back my loan application! How can they do that?:confused:

Nothing in my financial situation has changed between the pre-approval date and now (my income and expenses are identical now to what they were when the initial application was filled out), plus the amount I was looking to borrow was the amount indicated at pre-approval, and I was still within the 90-day pre-approval period.

The problem is that, after waiting days to find all this out, it looks like I'm now going to lose the contract, based on finance (that I was assured that I had).

Anyone got any ideas for recourse, or options? And now that I've been knocked back once, and need to declare this on any future applications, I look like a credit risk.:eek:
 
Reason for refusal

I was told that it was because the child support payment I receive from my ex is not 'guaranteed income'.

However, two points to note:
(a) they were aware of all my sources of income at pre-approval stage, and it didn't appear to be a problem at that point, and
(b) the loan can be well and truly financed, even if the child support payments stop (they're not actually worth a lot, anyway, and make up a very small percentage of my overall income).

It is the NAB who are being 'difficult'??

And geez, I'm glad I didn't buy at auction, or I'd be in a lot of hot water right now.
 
NAB (assuming it's NAB direct and not NAB broker) can be quite difficult to deal with.

I wouldn't give up just yet.

Firstly - get your broker to rope their BDM into this. They would have deemed that form of income suitable for the preapproval (assuming they bothered with an actual assessment) so no reason why they should knock it back here.

Secondly - look at other ways to improve your borrowing capacity. Do you have any liabilities that can be reduced? Credit card limits?

Thirdly - if neither of the two options above work, look at your options with different lenders. Child support will be recongised by some banks and not others - your broker will need to find out who this fits with.

Best of luck!

Cheers

Jamie
 
Was the loan mortgage insured?

Often the final stage of a loan is to run it past the mortgage insurer. The don't do this as part of the pre-approval process. It's not uncommon for the mortgage insurer to ask for additional documentation and they do have the power to decline the application at this stage.

For this reason we strongly prefer to use lenders that have their own underwriting authority and don't need to send it to the mortgage insurer for final approval. The NAB does have this authority but sadly though it does still happen from time to time (rarely results in a decline, but it makes me nervous for a few hours).


The NAB has age restrictions around child support which can create this issue. They may not have picked this up during the pre-approval.
 
Thanks for all the support and ideas everyone.

Hopefully, it looks as though another lender may have been found, if NAB choose not to play ball.

It's a case of 'fingers crossed' for the next 24 hours??..
 
All the best to you, and let us know who's your White Knight. We've been thru similar and wasted a lot of time. Luckily we were able to cancel it so hopefully didnt get a Rejected sign on my forehead.
 
AFAIK nab policy is that if your CS payments can be shown for 6 months with no issues via bank statements and a future payment of 5 years then should be accepted. CS needs to be registered with the CSA.

If the servicing works without the CS then dont know why it would have been included with it to begin with.
 
I often find people have a different term for the word pre-approval.
My friends on many occasions have said "I have pre-approval" for X amount of dollars in which I then ask "why did your broker go through pre-approval?, was it neccesareily as that is a hit on your credit record".
On many occasions the reply is, "oh no they just told me how much I will be able to borrow".

So many borrowers believe this to be pre-approval even though it is definitely not the case. This doesn't sound like that but just an observation I have made.
 
I often find people have a different term for the word pre-approval.

The only pre-approvals that are actually worth something are those that are assessed by credit - and if there's LMI involved, that credit assessor has authority to approve it.

That way - the only remaining factor is the valuation.

Any other pre-approval that isn't credit assessed is worthless.

Cheers

Jamie
 
I often find people have a different term for the word pre-approval.
My friends on many occasions have said "I have pre-approval" for X amount of dollars in which I then ask "why did your broker go through pre-approval?, was it neccesareily as that is a hit on your credit record".
On many occasions the reply is, "oh no they just told me how much I will be able to borrow".

So many borrowers believe this to be pre-approval even though it is definitely not the case. This doesn't sound like that but just an observation I have made.
Hi albanga,
could you explain how the negatives of the unnecessary pre-approval affects the credit rating/record and why?
 
Hi albanga,
could you explain how the negatives of the unnecessary pre-approval affects the credit rating/record and why?

Each time you apply for a loan you get an enquiry on your credit report, this includes pre approvals. If you have a bunch of credit enquiries lenders will start to get suspicious and may assume there's some reason why other lenders aren't giving you the money. It can lead to loans being rejected automatically by the lenders computer systems.
 
Was it a full NAB pre-approval or a computer generated one ( ie done in less than 1-24 hrs)

It was a 'proper' pre-approval, done through a broker who has a lot of experience with NAB products. We crunched all the numbers before even going to pre-approval, and it indicated that I wouldn't have any issues. 'Official pre-approval' was then given (not just the broker telling me how much I could borrow).

AFAIK nab policy is that if your CS payments can be shown for 6 months with no issues via bank statements and a future payment of 5 years then should be accepted. CS needs to be registered with the CSA.

If the servicing works without the CS then dont know why it would have been included with it to begin with.

There has never been a missed payment, and the documentation provided as part of the proof was the official CSA annual assessment letter.


I am still waiting to find out what's happened. Apparently, the BDM was contacted, and even he/she can't work out why it wasn't approved. So the latest is that there was a 'meeting' late this afternoon between the state manager and the person who declined the loan (but I'm still waiting to see what comes out of that………). Thankfully, I have a great mortgage broker, buyer's agent, financial planner, and conveyancer all working with me to help get this sorted out (they're all as confused as to why the loan was declined, as what I am……..).
 
Thanks for all the support and ideas everyone.

Hopefully, it looks as though another lender may have been found, if NAB choose not to play ball.

It's a case of 'fingers crossed' for the next 24 hours??..

Good on you Kay Tea - fight on! You will get across the line, I just know it:)
 
Must confess i am surprised our Buyers Agent, Financial Planner and Conveyancer have any knowledge or experience of NAB credit score policy.

Cheers
 
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