Pulling Out of Contract & Finance Clause

Hi


In my offer and acceptance contract the finance clause states that the amount of the loan from ANZ will be $205 K. It was a standard REIWA "finance applicable clause"


What happens if ANZ only decide to lend me $199 K?


If ANZ dont lend me the $205 K as stated in the contract am I able to get out of the contract?


thanks :)


Gotta get going to work now
 
Usually if you get a letter from your broker or bank saying you cant get finance within the finance clause, then thats the end of the contract.
I havent had (many declines!) any instances where the other side stipulated to see the lenders actual decline advice in writing or the loan amount etc. In practice there have been a few occassions where I have been asked to provide decline letters where the loan has actually been approved (they wanted to purchase another property etc), and occasions where the loan was only approved to a lesser amount and the purchasers went and found the rest of the cash to complete because they wanted that house etc.
 
Originally my broker said that I would be able to take out some equity from my ppor to use as the deposit for my 1st ip. PPOR is X-col with ip.

My PPOR is worth about $260 K and I have a $177 K loan on it


He also thought I could get $207 K


The outlines of the proposal are as follows:-

Purchase Price $210,000
S/Duty, Rates etc $6,500
Sub Total $216,500
Customer Contribution $17,500
Loan Amount $199,000

Security

ANZ can take a First Registered Mortgage over the new investment property she purchases. Her home at --- ------ ----- is already held by ANZ and will be offered as additional security. The LVR will be 80% so no LMI will be involved.


ANZ will not go above 80% LVR.


I now have been told that the customer contribution of $17,500 will have to come out of my own cash. I have been having 2nd thoughts on and off whether or not to go ahead with this deal because I did not want to use my cash at all in the deal or very little of it as possible. I thought the deposit would come out of my ppor. I had not budgeted for this.

I could go ahead with it but I would only have around $13 K left in the bank and I have still got lots of start up expenses. I cant and dont want to live with just $10 K in my bank. Its too stressful.
 
Usually if you get a letter from your broker or bank saying you cant get finance within the finance clause, then thats the end of the contract.
I havent had (many declines!) any instances where the other side stipulated to see the lenders actual decline advice in writing or the loan amount etc. In practice there have been a few occassions where I have been asked to provide decline letters where the loan has actually been approved (they wanted to purchase another property etc), and occasions where the loan was only approved to a lesser amount and the purchasers went and found the rest of the cash to complete because they wanted that house etc.

ok thanks

.............
 
LMI dont need to have a reason these days ..................

Rental reliant will do, or you cant afford the loan on IO, u can have it on PI :)

The credit guys and girls are really on notice for any referred deal, if the credit scoring system hasnt approved it, then dont expect much sympathy from the humans, coz statistically the black box credit score will always beat the human long term.

BTW, dont mess around with Xcoll if you can avoid it.

This is one good case where you could draw equity from ANZ property, and use it to provide a separate cash deposit using another lender with a better serviceabiloity model and less hassly LMI rules.

The issue will be getting around the ANZ LMI cash out rules.

ta
rolf
 
BTW, dont mess around with Xcoll if you can avoid it.

This is one good case where you could draw equity from ANZ property, and use it to provide a separate cash deposit using another lender with a better serviceabiloity model and less hassly LMI rules.

The issue will be getting around the ANZ LMI cash out rules.

ta
rolf

I'm waiting to hear back from my mb who is over east.

Yeah thats what I would have thought!! That I could draw equity out from my ppor to use as a deposit. I have a $177 K loan on a $260 valued property.

I have been seriously thinking of pulling out of this. Because why use my own cash when I dont have to.

I was also thinking of waiting another 6 months to save some more money and then do it. My job will be reclassified at a higher level early next year too.


thanks Rolf :)
 
I find out next week if have finance approval. i will decide then whether or not I will be pulling out. Most likely I will.

Will I have to pay any settlement costs? I'm guessing yes I'd have to pay something? For the work they have done already for me? Is that right?
 
yes $400 or so probably, depending what they have done

Hi Kim,

1. do you really want to get out. If yes, you definitely got the ground to get out because do not want to lend you enough money.

2. You might use the bank's approval to knock down $10k on the price if you really want to buy.

3. I do not think you have to pay settlement fees etc. Settlement agent usually starts working from finance approval. They know a lot of deals fall through because of finance
 
I have good news

Mum asked a few times if I wanted her to help out. I said no I wanted to do it on my own.

Today whilst im here at my parents house mum and dad offered to pay for the stamp duty. To pay $5 K. I had a think about it and thought that the extra $5K would take some pressure off me, some stress. Then I'd only have to pay $12 K for the deposit.

But I made it clear that I did not want it as a gift. If I accepted it it would be for a loan.

yey so now I'm going ahead with it. I feel more at ease that I have an extra $5K in the bank.

I think mum could see i would be missing out on a great opportunity here.

:)
 
why not try Analysts idea first anyway.... tell the seller you can't get enough finance and if they want the deal to go thru they need to lop $5k off the price. If they say yes, then your Dad's dosh is safe, if they say no, then just say no worries Dad has come to the rescue we are on.
 
why not try Analysts idea first anyway.... tell the seller you can't get enough finance and if they want the deal to go thru they need to lop $5k off the price. If they say yes, then your Dad's dosh is safe, if they say no, then just say no worries Dad has come to the rescue we are on.


hmmm it could be worth a shot. So how exactly would i go about doing it?

If he says no, shall I wait a couple of hours and then say dad has come up with some money to help me?
 
see what other posters suggest. personally i would get your settlement agent to ask the other side for the concession. you just have to be careful not to fail your contract whilst you are doing this i.e. don't categorically say in writing "I can't get finance the deal is off" as they just MAY have a better offer waiting out there, who knows. Talk it thru a bit on this post before you do anything...
 
I have good news

Mum asked a few times if I wanted her to help out. I said no I wanted to do it on my own.

Today whilst im here at my parents house mum and dad offered to pay for the stamp duty. To pay $5 K. I had a think about it and thought that the extra $5K would take some pressure off me, some stress. Then I'd only have to pay $12 K for the deposit.

But I made it clear that I did not want it as a gift. If I accepted it it would be for a loan.

yey so now I'm going ahead with it. I feel more at ease that I have an extra $5K in the bank.

I think mum could see i would be missing out on a great opportunity here.

:)

Hi Kim,

I think it is absolutely awesome you understand what you are doing and are ploughing ahead, if it is what you want to do. Your parents must be proud of you.:)

What I would do is explain to the agent that you haven't been approved for the amount you originally thought and would the vendors consider a sale price of 5k less.

Wait for your Finance Approval though.

Regards JO
 
I've decided to pay back the $5 K ASAP to mum and dad. Their help has basically given me a bit of breathing space, some emotional support, SANF (and also financial) I know they have my back which I think is what i really needed.

Without their loan after paying for the deposit and expenses such as air con, other repairs to the place I would've had just $10 K in the bank. With their help and $5K loan i'll have $15 K as a buffer which puts me a bit more at ease. Anyway after tax my expenses to hold the ip will be around $3,500 pa which means I will be able to afford to pay out their loan over the space of 12 months. Thats the goal i have set for myself! I need to be out of debt with my parents before I allow myself to save any more money. Its really important to me.

I still feel guilty though about borrowing their money. I am independent. When I buy my next one I will wait until I have some growth in both properties so that I can use the equity as the deposit rather than relying on my savings. My goal is 2013 for ip # 2, but only if I can afford to do it on my own.
 
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