Questions re LMI + Valuations

[Fadz]

Hi,

Another longtime lurker first time poster.

My GF and I are due to settle on our new townhouse in the next 2 weeks and have been formally approved with ING for our loan for 335k. We are first home buyer and are using it as PPOR.

It has been just over a year since we exhanged contracts for our OTP purchase where the contract price was 373k and we had an additional 14k of additions such as an Ensuite, Floorboards mostly stuff we thought would add value to the house. Basically a total of 387k

ING were meant to do a valuation on the property which we believe is worth more (420k) given we purchased it as an affordable housing package which is somewhat subsidised by the ACT Government here in Canberra but ING are not going to as for their "risk management" will take the contract price only despite their policy saying otherwise.

Do we have any leg to stand out given settlement is due in 2 weeks and not so keen to risk penalties by a delayed setttlement. Broker apparently isnt happy about their decision but says our time frame is counting against us. Its also not that we leaving things to the last minute as we have been trying to sort this out for the last month.

Long term this is a stepping stone for us for bigger and better things but thought i would seek some other advice from some of the very helpful ppl on this forum.

Regards

Brendan

 

[Fadz]

Might i add that we just trying to reduce our LMI costs which currently sit at 87% to something smaller or no LMI at all would be ideal

 

[Aaron_C]

This is standard amongst pretty much all lenders - lower of contract price or valuation.

 

[devank]

Is it possible to buy it for 420K but ask the builder to pay the stamp duty?

 

[Jamie M]

Hi Fadz

Welcome aboard.

I just settled a loan for an ACT off the plan purchase and was able to get the lender to go off the valuation rather than the contract price. So it is possible.

Cheers

Jamie

 

[Marty McDonald]

ING policy is they will go off valuation if contract is over 12 months so they are going against their own policy just because. I would push back real hard.
Good luck..

 

[Fadz]

Hi Guys,

Thanks for the feedback. Just to add there has been no valuation done on the property by ING so not sure how they can disregard against their policy.

Regards

Brendan

 

[Peter_Tersteeg]

If they haven't sent a valuer through the property, then they're simply using the purchase price. There's almost no chance that they'll assign a higher value on a purchase without a full valuation.

 

[Colin Rice]

Hi Fadz

Welcome aboard.

I just settled a loan for an ACT off the plan purchase and was able to get the lender to go off the valuation rather than the contract price. So it is possible.

Cheers

Jamie

Which lender and what was the process to accept valuation over contract?

 

[Peter_Tersteeg]

Colin, most of the majors and second tier lenders will do it, the tough part is convincing the valuer.

 

[Jamie M]

Which lender and what was the process to accept valuation over contract?

There's a few. This was ANZ - contract was signed 12+ months prior.

Cheers

Jamie

 

[tobe]

these variations, floorboards etc, have you supplied evidence of this to ING? They form part of the contract, and therefore the contract price changes with receipt of those variations.

 

[Fadz]

Yes we have provided the additions to ING and they are accepting them. issue is the refusal to do formal valuation whether that be desktop or walk through despite our offer to pay for it

 

[Peter_Tersteeg]

Yes we have provided the additions to ING and they are accepting them. issue is the refusal to do formal valuation whether that be desktop or walk through despite our offer to pay for it

There's no logic to banks sometimes.

We've recently done a deal with ING where the borrower has tripple the income required and is only borrowing 45% of the property value (she's paying cash for the rest), in Melbourne metro. As far as loan applications go, it doesn't get much easier.

ING insisted on a full valuation and took extra time to double check everything. Perhaps they thought it was too good to be true.

 

[tobe]

Yes we have provided the additions to ING and they are accepting them. issue is the refusal to do formal valuation whether that be desktop or walk through despite our offer to pay for it

so if they are accepting them, whats your issue? Did you want them to use the valuation instead of the purchase price? Only a very few lenders will do that, and even fewer mortgage insurers.

Either try a new lender, or settle as is with ING and pay LMI.

 

[TheMarket]

There's no logic to banks sometimes.

We've recently done a deal with ING where the borrower has tripple the income required and is only borrowing 45% of the property value (she's paying cash for the rest), in Melbourne metro. As far as loan applications go, it doesn't get much easier.

ING insisted on a full valuation and took extra time to double check everything. Perhaps they thought it was too good to be true.

I have similar problem, bank for some reasons like people keep chucking their cash in the banks and show them they can save and don't believe people can be debt free and make a killing

I told them I don't keep cash...I only keep cash when share trades above intrinsic value and I don't want to pay....I only buy discount to intrinsic value

I have plenty of asset, shares portfolio in their 7 figures with all the glory of how I accumulate them over the last 10 years and its return... and debt free properties...

 

[Jamie M]

There's no logic to banks sometimes.

There really isn't.

Had one recently that was a vanilla deal. Strong servicing, low LVR, excellent employment history and statement of position. There was not one weakness with the application.

Credit scoring knocked it back - auto decline.

Got in touch with my BDM, he looked over it - and was of the same opinion. Strong deal, no weaknesses at all. It just seemed as if the credit scoring malfunctioned for that split second.

It was manually reviewed and was formally approved the next day.

Ahhh banks

Cheers

Jamie