Is it true that banks are no offering pre-approval right now

[Vampii]

Is it true that banks are not offering pre-approval right now

Hi there,
my friend signed the contracts for an apartment and then applied for finance. The finance fell through and they wasted over a $1K on expenses. I asked him why didn't he get pre-approval before looking at houses and his reply was that the banks are not doing that at the moment.
I went to see a mortgage broker yesterday to see i i could get pre-approval for finance and got the same reply. Banks are under staffed and unable to do pre-approvals.
Is this info correct? Thanks in advance

 

[Rolf Latham]

Not quite

Some lenders arent running pre approvals, or if they are it taks like months, the vast majority are.

ta
rolf

 

[tobe]

Most banks that used to do pre-approvals (bankwest and ing for instance never did pre-approvals) are now prioritising 'real deals' ahead of pre-approvals. Lately its been between 1 and 2 weeks for pre-approvals for me. I do a lot, as I work with a volume builder, and cant get contracts straight away. A good broker or banker will be able to give you a good idea on your chances, you just need to judge who is good, as they will all tell you they are....

 

[Peter_Tersteeg]

RAMS recently launched an 'online pre-approval'. The broker puts in a the data and instantly gets a pre-approval letter. It's not really worth anything other than a basic and completely unverified assurance. BankWest and NAB are similar.

I did receive an email from RAMS this morning stating that if a pre-approval for auction is required an application can still be lodged through normal channels and a verified pre-approval can be provided.

I've generally found that a few calls the the right place will secure a proper pre-approval when required. In most cases it's not really necessary as a good broker will be able to assess an application with a reasonable margin of error. This is only required when there's something a little out of the ordinary or if the application is close to the line.

 

[Dragon]

We are still doing pre-approvals.

I know some lenders don't do pre-approvals this because the conversion ratio between a pre-approval and a full approval is low. So they allocate resources to a full approval loan.

 

[Jazza]

... ing for instance never did pre-approvals)....

Incorrect unfortunately.


A friend of mine looking for his next IP got 'conditional approval' last week which sounds more solid than pre-approved (since it's a loan under x,y,z circumstances). I've also heard pre-approval means diddly anyway....?

 

[Peter_Tersteeg]

Incorrect unfortunately.


A friend of mine looking for his next IP got 'conditional approval' last week which sounds more solid than pre-approved (since it's a loan under x,y,z circumstances). I've also heard pre-approval means diddly anyway....?

Conditional approval and pre-approval are the same thing in this case.

 

[chylld]

Conditional approval and pre-approval are the same thing in this case.

Not necessarily. For my property, I got a pre-approval, a conditional approval and an unconditional approval all separately from BankWest. They're different letters and worded quite differently.

This was in April/May though, not sure if it's changed since then?

 

[Spectre]

I'm sure I went to an ING seminar and they advised they dont actually even review the application until a contract is provided.

All they do is only go off of what the broker inputs on the servicing calc and dont actually check the payslips/tax returns etc - its seen as a waste of time for them - which may be fair enough

 

[Peter_Tersteeg]

Not necessarily. For my property, I got a pre-approval, a conditional approval and an unconditional approval all separately from BankWest. They're different letters and worded quite differently.

This was in April/May though, not sure if it's changed since then?

Many pre-approvals use the words 'conditionally approved'.

They can all be worded very differently depending on the circumstances and what the outstanding conditions are.

Generally a pre-approval is before you find the property. A conditional approval is after you find the property, but they've just done the initial checks it's usually at this point the valuation is ordered, then there mighe be LMI.

If you want a solid pre-approval with ING you do need to put the application past the appropriate person, otherwise no-one acutally looks at it and it's worthless.

 

[Jazza]

I'm sure I went to an ING seminar and they advised they dont actually even review the application until a contract is provided.

All they do is only go off of what the broker inputs on the servicing calc and dont actually check the payslips/tax returns etc - its seen as a waste of time for them - which may be fair enough

No trying to be clever but I didn't start looking until I had this 'pre-approval' then once I hit them up for a loan it was approved quick smart. So yes they did them even if they don't now. And I didn't use a broker.

Point is just goes to show you should still include an appropriate clause to get out of the contract if you can't get finance regardless of your pre-approved state or otherwise.

 

[Bradsdad]

I just love the words "subject to"

Without a pre-approval which is utilising existing security held it is best to proceed with a certain level of caution.

 

[tobe]

Ing dont do pre-approvals. They spit out a conditional approval letter once the broker inputs the property address and faxes up the contract of sale. After the val is back, the assessor looks at the deal, and perhaps gets LMI to take a gander. It means the deal is hopefully only handled once by the assessor and therefore they can handle more deals with less cost.

Other lenders look at the income and credit checks, send up the deal to LMI, and come back with a pre-approval. Once the property is located, the val is ordered, and the assessor takes another look, along with LMI. They double handle the file, its a little more time consuming, and therefore expensive for these lenders, but the pre-approvals are stronger than INGs and Bankwests, as it has been seen by the assessor initially.

For the banks, they want to reduce their costs, not do pre-approvals, but for the clients, they want someone to look at their circumstances prior to purchase. Some clients are more confident than others, but most want a pre-approval. There is also a significant proportion of clients whose pre-approvals lapse, which means if they went to a bank that did their checks, that bank lost money.