Help - I'm in a major panic!

flatout said:
Can I ask why you put down a 20% deposit? I understand that you were only seeking 80% finance but that doesn't mean you have to hand over the other 20% as a deposit - you simply contribute your share at settlement. I have bought three properties with deposits of $1000, $500 & $100 respectively. We also had another property held on a $500 deposit but subject to a building inspection which "failed" causing us to walk away, deposit intact.
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Flatout, of course you can exchange contracts on a lower deposit than the "standard". However, if you as a purchaser fail to complete the contract (after exchange mind you - which I believe is what pompey11 is talking about in this situation since it is only 2 weeks to settlement and the contract has gone unconditional - after cooling off period expiry I assume) then you can still be sued for the difference in what you agreed to pay and the final selling price to a new purchaser (if it is lower). You can't just "walk away" after exchanging contracts.

Anyhows we are only arguing minor points around the edges, which is not a lot of help to pompey11 atm.

Trust it all works out pompey.

Aimy
 
It looks like you have made two major mistakes:

1) Paying a full 20% deposit - I never pay more than 5%, and as others have done $1000 should be enough. You should have only paid $1000 and provided the rest at settlement.

2) You did put in a finance clause apparently. Did you have unconditional approval IN WRITING on or before the date specified in the finance clause? Apparently not - and you should have cancelled the contract on that day.


Normally contracts have a penalty clause ie for every day of delay pay an extra amount at 15%pa. Maybe you can delay settlement by two weeks / a month and pay around 1.2% extra on the price. The instead of borrowing 80% you could borrow up to 95% and pay LMI. You can hope to god another bank provides a better valuation.

Another option is to pull out of the contract and tell the vendor to put the unit up for auction. You have to pray someone else buys it and at a higher price than what you offerred. You are liable for the costs of the auction and if the winning bid is below your offer you will have to pay the difference, that could be extremely painful.

Basically you have dug yourself into an extremely large hole!!!
 
tom1000000 said:
Did you have unconditional approval IN WRITING on or before the date specified in the finance clause? Apparently not - and you should have cancelled the contract on that day.

........

Basically you have dug yourself into an extremely large hole!!!
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We are all at risk of this happening unfortunately... even tho you may have a written offer for finance it is always conditional (don't be fooled by the fancy piece of paper with logos etc), one of those is subject to the bank changing its mind. Seems as tho they have changed their mind.

When I set up my last real estate business I invested quite a sum of money exploring the legal side of offers going unconditional due to finance and waht qualified as finance approval. You may be very surprised how NOT black and white this area is.

PS. the reason I did the latter was because when the market was running hot here we had vendors cancelling contracts left right and centre - one of their beloved loop holes was finance offers - it is very easy to say an offer is not unconditionally finace aproved because no finance offers ever are. Then it gets down to ongoing conduct, intentions, the judge on the day... trust me it gets ugly. And if you buy a property, off the plan say, and want to be sure it is not challenged on these grounds, then I would strongly urge you to waiver the finance clause and go CASH unconditional
 
Broker

Still in a quandary?

We've used this broker a couple of times, and are very happy with what he can do. Chris Corfu : 0405247472

If the original contract had the usual 'subject to finance', and the bank have no rescinded on finance, then hasn't that 'subject to' failed, and the contract note negated?

Let us now how things go.
 
Whenever I hear of these things it always seems to be the same bank :(

I am doing a low doc now myself. Bank of Qld didn't approve it however I did get it through NAB. Apparently NAB have their own LMI so BOQ tells me which made it easier for them to approve.

Kev
www.gogecko.com.au
 
Fat Lizard said:
If the original contract had the usual 'subject to finance', and the bank have no rescinded on finance, then hasn't that 'subject to' failed, and the contract note negated?
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well if you receive an offer an offer that is on acceptable terms and conditions then the clause is satisfied and you move on. If you have accpeted the fact that the bank can change their mind - which they all include the right to do -then you are left exposed.
 
Ausprop said:
We are all at risk of this happening unfortunately... even tho you may have a written offer for finance it is always conditional (don't be fooled by the fancy piece of paper with logos etc), one of those is subject to the bank changing its mind. Seems as tho they have changed their mind.
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I have recently received a letter from a finance company that says "...unconditionally approved for 90 days".

Are you saying they can "change their mind"?
 
How are you getting on Pompey11? Did you get another lender or are you still in a panic.

Something similar has just happened to us as well. I'm alternating between panicking and telling myself it is all going to be OK. At the moment it is all going to be OK, everything will be OK....

At a recent seminar I learnt that its not good when things go smooth, there needs to be ying and yang, and that when something turns bad people often give up, but when things turn bad you are almost there, and to not crumble but keep pushing. The harder that you have to push usually the more successful the deal will be.

Ours will certainly be successful, as I am sure yours will be.

Good luck


Sunshine
 
ThomasAJ said:
I have recently received a letter from a finance company that says "...unconditionally approved for 90 days".

Are you saying they can "change their mind"?
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They approve that they will lend you xxx based on your financials. They only approve a specific loan on a specific property after they get the valuation done.
 
As emergency finance can you draw down your credit cards? Its expensive credit but can get you out of a pickle for a few weeks if you can pay it back soon.
 
We too had a similar situation less than a month ago where we had no finance 6 days before settlement. What we found out later was that the bank that we were trying to obtain the finance through thought we wanted 95%LVR but we were actually applying for 80%. It was with ANZ, mind you my husband works for ANZ as well but do you think that made any differance?? NO, they still took forever in a day to approve the loan even though the valuation came back at purchase price, they were wanting way too much unecessary information from us as as i mentioned they thought we wanted 95%. In the end we went to another lender within ANZ who really did look after us, our loan was done & completed within 3 working days which included all loan documents signed, sealed & delivered & settlement went ahead as scheduled. But ironically, on settlement the vendors solictor was unprepared so therefore in the end settlement was delayed 3 days anyway. When we sit & talk about it we just laugh thinking that someone above was really looking out for us, it was such a close call & an exprience we will never forget.

Anyway just thought i would share that.

Rgds,
Gina.
 
As I understand this situaton the bank has not withdrawn their offer of finance but rather the valaution has fallen short of the purchase price and therefore they wre unwlling to lend 80% against purchase price?

So the issue is the shortfall not complete lack of finance. So the answer is find a bank that users another valuer that brings the valuation in at purchase price. (start with valuer and work backwards)

Find the short fall elsewhere and maybe refinance at your leisure.
 
From what I can gather....the mistake here is that Westpac should have done the valuation before finance went unconditional. I am certain that the letter of approval would be subject to the valuation.

14 days finance is no way enough time for westpac to do a valuation. They are so slow at doing anything...I always ask for a 3 weeks finance clause and when the sellers ask why, I just tell them because I am using Westpac.

Has your other 3 IP's gone up in value? what you can do is request Westpac to do a valuation on those IPs so you stay within your 80% LVR whole portfolio. Unfortunately, you will need a few weeks and they're so slow.
 
BoatBoy said:
Are westpac using HTW for val's?

They just did our's low again, GRRRrrrrrr.

Dave
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Really? Westpac always gives us the best valuation. But my bank manager did tell me that westpac are very conservative and often properties do come in under value but she's surprised that all mine are really good.
 
sue78 said:
Really? Westpac always gives us the best valuation. But my bank manager did tell me that westpac are very conservative and often properties do come in under value but she's surprised that all mine are really good.
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Half our stock is with Westpac and Heron Todd White do the vals, they always do them low, even when provided with sales of similar property as back up.

The other valuer we use for other properties in the area say's he would put $15k plus on each of the HTW val's, but Westpac will only accept HTW.

Very frustrating.

Dave
 
The valuation is the main reason I tend to prefer ANZ to Westpac (despite having Westpac loans myself).

As a broker, I order the valuation (not the lender). If I haven't had a reply within 3-4 days I call the valuer to find out what's going on. The valuation is returned to me (which I pass on to the bank and the client) and if it's low, I can at least call the valuer directly to discuss it.

There are also several other lenders who do this, but ANZ is the only major lender.

Westpac do have a slightly better product, but nothing a little creating structuring can't get around. Westpac also tends to be slightly more expensive.
 
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