Signing Finance docs before purchase

[cgw]

Hi, the MB who I have been seeing, has now sent me the docs fm the Bank to sign. These are the docs for 2 new LOCs to be used when I buy my nxt IP. One LOC is for the 20 percent deposit, and the other for the shortfall.

Just sign here, fork out the mortgage stamp duty fees etc, for something I don't even need yet?? as I haven't purchased.

Is this normal?? or should I tell him to wait out Mr MB, until I find a property, then I will review yours along with others and then decide on which MB and bank I am going to use.

 

[Kristine..]

Hi cqw

The Bank has done what you asked it to do.

It has approved you for a loan, and sent you the documents. You will probably have noted that the offer is valid for 30 days, so if you don't return the documents then the offer lapses.

Why did you choose this particular mortgage broker? They have done what you asked them to do: Assist you with selecting a lender, preparing an application etc The Bank will have paid a valuer to inspect your current security, and paid their settlement Solicitor to prepare the documents. They cannot charge you for this work until settlement.

If you didn't want the loan then why apply now? The broker is only paid after settlement of the loan, so is it entirely fair of you to have them do this work and you are now going to say "wait out Mr MB, until I find a property, then I will review yours along with others and then decide on which MB and bank I am going to use."

Surely you thought this through before you instructed the broker in the first place?

Professional and ethical behaviour cuts both ways. It's one thing to ask for a bit of information, quite another to effectively say you were just shopping around, so 'wait it out' and you'll decide later.

Just my thoughts on the subject

Cheers
Kristine

 

[Rolf Latham]

Hiy CGW

In the current climate, id be taking whats on offer.

Obviously (?) the locs are against properties already with a lender ?

If thats the case, once u find a new place, and you want to move ur existing loans to another lender at that time, the timing is really poor, and likley wotn suit what you want to do at all.

Could we have some numbers pls so we can help to see what might be best ?

In the absence of any other data, id have to agree with Kristine

ta
rolf

 

[Perp]

I'm with Kristine; if you didn't want the loan now, why did you apply and put the MB and lender to all that trouble? I agree that it would be unethical not to proceed.

 

[marg4000]

I agree, why apply for loans you don't want at the moment?

Before we buy an IP we organise the finances, but only to the point of getting all the information and details. Actual applications aren't lodged until we have signed a contract to buy.

You have two options - let the documents lapse which will incur no charges, but don't be surprised if the MB does not take you seriously in future. Karma, what comes around goes around.

Or maybe you want the LOCs in place and the money waiting so that you can swoop on a good buy. In that case, complete the loans and place the money in an offset account against your PPOR, which will result in minimal holding costs. Then you are in a position to act immediately, which seems to be what you wanted when you applied for the loans.

Unless the whole thing was a misunderstanding, (i.e., you wanted information and the MB thought you wanted to proceed immediately) in which case I suggest you contact your MB immediately to clear things up.
Marg

 

[s_t]

You have all assumed that cgw has actually asked the MB to get the loan. CGW???? He may have just been talking to the MB about possibilities and the MB decided he want's to be the one to 'get the job' so to speak by pushing it through.

 

[Spectre]

A bank isnt just going to do docs without cgw giving him all the info and signing privacy acts and so on.

IMO I dont see an issue with setting up a LOC for a deposit account before the purchase.

At least you know where you stand and know what your cash position is.

If they wait until the purchase, then you have to show lender #2 where the deposit is coming from etc etc.

So I'd figure hes just covering this base ahead of time.

And, as has been mentioned, the loan might get approved today but it might not be approved tomorrow.

You also need to bear in mind that if you ended up repaying the LOC with another lender then its probably likely that the broker would get the commission clawed back by the bank if its inside an 18 month window... with the exception of a few lenders who dont claw back

 

[dean lynch]

I recommend you speak to a solicitor. I don’t see any reason why you would need to pay anything at this stage. Mortgage documents from a lender are only issued once a property has been located and full approval has been granted. You might also like to check with the Mortgage & Finance Association of Australia, http://www.mfaa.com.au/ which is like “Big Brother” for Mortgage Brokers.

Cheers,
Dean Lynch
Principle Mortgage Consultant
Australian Mortgage Brokers
E: [email protected]
W: www.deanlynch.com.au

 

[Spectre]

?

the docs were only to cover the deposit per se and doubtful you'll get out of stamp duty so once the loan funds you have to pay for it though....