Urgent - Pre approval - First loan

Hi all,

In a predicament... thought I had to just put a $2k deposit down for a new estate.. getting in stage 1 so keen to settle even though it's not the most ideal lot (don't know the future and what future releases hold so taking the plunge) I'm thinking of settling this sunday.

Initially lodged my interest for lot #'s with no finance preapproval and 'subject to financing' as my context, still got allocated the eventual lot... and upon questioning/phone conversations i swear all I needed was a $2k deposit. First home buyer so in my naiveness perhaps, thought all I do is sign, pay a $2k deposit and then find myself a loan in the meantime between now and settlement when deeds are issued oct 15'ish.

Agents been busy all round the clock.. finally got an answer out for an appointment this sunday as she can't hold the lot much longer... fine by me but was thrown in at the end of her email that pre approval copy is required.. say what?!?!

So few questions, given the urgency (tomorrow being saturday - are banks even open to conduct pre approvals) i would appreciate answers asap and any further detail to help a newbie out:

1) Can i get pre approval on a saturday... before signing on sunday lunch? Are only certain banks open? And if so which ones can i head to?

2) Linking on from 1) my initial intentions were to either find a so called good mortgage broker (first time, so again I just want to find the best person with my best interests in mind and obviously their success to follow) and then hunt out the best loan....Given that can I apply for pre approval somewhere, get it, secure the lot, then still find another lender for the final settlement?

Or does pre approval lock you in to using that bank for settling? Or is that up to your sales contract?

3) Suggestions as to what banks or lenders are the go to these days... saw in this thread: (http://somersoft.com/forums/showthread.php?t=106753) that many have multiple banks.. so i assume they must vary quite abit... my initial requirements are - but then I am new to property so please advise if I should consider other loan features or aspects down the track:

a) Ability to park additional money into an offset account, preferably at no cost (bankwest quoted $9/month for this ability, is this normal?)

b) ability to park as much additional cash, as soon as I want (e.g. day 1 after loans taken out) into the offset.... ability to therefore withdraw any and everything in full for future investment or cash flow needs.. is this acceptable norm?

c) Lender with a great, competitively low variable interest rate.

d) Lender with stability in low rates - no use going a low rate lender now if they're known to then leave rates on hold while everyone else drops in the future... RElying on people's experiences and reputation here

e) Other fixed or once off costs: What can I expect?? And preferably a bank that gets rid of the nonsense fees or charges, and just gets down to a competitive variable rate without the hidden this and that


Context:

Perth based
LVR: Looking at 295k block of land, about 25-30k cash deposit now.Settlement being oct 15 when title is issued means that my first home savers account unlocks as a normal cash account. This will free up another 45k, my intention was to access this from the 1 July 2015 rules changes therefore. Ultimately I want to avoid LMI.

Informal borrowing check by bankwest every so often: I'm currently slated for about 490,000 borrowing capacity. Previously 570k, but a $10k drop in income from losing a FIFO allowance has basically shaved off $80k... surprising bummer. So to me the issue is more of where do I get pre approval in such a short unplanned notice, rather than not being eligible for lending.

Property - looking to live in it for 6 months, get the FHOB grant, stamp duty, then rent it for a few years before deciding to sell up for a profit, or continue renting. Ideally if rent continues to cover I'd be happy to pay it down and build passive income. It's in the Piara Waters growing south eastern corridor suburb, so i anticipate alot of rental stock etc. and hence I didn't think rental would be too lucrative and a sale might be the way a few years down the track. I don't quite understand leveraging but then hoping the offset account will allow me to withdraw for future equity deposits on new lots...

Is there any reason to use a redraw over offset account? I know redraws are messy for investment purposes /interest deductbility, hence I saw no other reasons to use a redraw, with offset allowing you to plough as much as you want in and take as much as you want back out, whenever you want, correct?

Hope that's provided enough info.... would really appreciate a thorough response to all points above... Ideally I'll have to wake up tomorrow morning (Saturday) then act on any advice here.... e.g. head to xxxx bank, get pre approval given all I have is the day. Again I stress - can I get pre approval in the interest of time, sign, then take my time over coming months to find a proper, good loan prior to settlement, and subsequently change lender? Not sure what the norm is when settling contracts on new land.

What should I bring along to speed a pre approval up if I need it done same day/before tom arvo? Pay slip? Is same day approval even required, or is it a lengthy, well evaluated decision?

I am an existing bankwest saver/customer - not sure if continuing a pre approval with them is beneficially faster?

Much appreciative of any advice and pointing me in the right directions. Thank you!
 
depending on your deposit amoun, a broker should be able to produce some form of pre approval "on the spot".

Given that the sales office only wants a pre approval you could apply for a loan with a low loan to valuation ratio,

Obviously the sales contract is still subject ti finance approval and you have taken the contract to a solicitor / settlement agent to have checked out

Whom you get the pre approval with doesnt need to be the same lender you settle with, a pre approval doesnt lock you in.

Interest only loan with offset is probably useful, but not super needy today.

ta
rolf
 
Unfortunately I don't /haven't had the time to assemble a property team. First timer here - haven't found anyone in Perth that has the calibre of some of the mortgage brokers posting on here . I'm a big fan of mutually beneficial relationships and really want someone who is willing to educate at free will, get the best deal, and in return they would have my utmost loyalty and word of mouth recommendation - if anyone knows of such a person in Perth, I'd be glad to know. I've seen a few good sharers on here from my short time (Redom - your guide on growing the million dollar portfolio was a great example).

That said... i assume without a broker to provide pre approval I need to go into a bank? Any that I can walk into on a saturday? And how do they go about proofing/checking my LVR - do I just bring a bank statement in of my cash accounts to knock the LVR below 80%, a payslip, and woila??

I have a settlement agent - family friend though, so should I be concerned that settlement agents may not be all created equal? Is there work quite regulated/compliance based, or is there an additional quality in having a good one that cheap is not always necessarily best?

For first home buyers I haven't heard of anyone hiring a lawyer to review the contracts... should I be? And where do i start - i thought a lawyer would charge an arm and a foot for something which for them i'm sure is quite simple... :( I think I'm savvy enough to read through it, could be wrong?

Should any checks with external consultants be done before signing now (and not just at the pre settlement date) and paying my deposit? I assume becuase of the speed these land releases go one has no time for hiring a lawyer (and the costs etc involved) to review standard signing? Don't think any other third party consultants are required at this stage? Correct me if I'm wrong please. Does it change if I note the fact that final development plans/ engineering plans are still awaiting council approval? As such they can't note any easements on the stages, although anticipate none... not sure if this needs to form part of the contract to be signed, however I anticipate the clauses are a catch all in the sales contract in the event to cover them for any easement that pops up... regardless of how unlikely...just so they aren't legally liable down the track.

Great to hear pre approval doesn't lock you in - so now I just need to get some sorta pre approval asap! Again - do lenders operate on a Saturday?

Interest only loan - saw this mentioned by Redom on the FHOB thread here... never thought about that actually... but doing the maths does it work out the same if, rather than paying off say $3,000 in mortgage repayments/month (interest + principle) you go a full interest only loan with offset, pay off $2k interest as required per month, then sock away $1,000 into your offset to effectively reduce your principal? This way you would have lower legal repayment requirements if times get tough, but you retain the same net loan balance in paying down your loan - correct? or have I missed a principle here?

Are there additional costs in setting up an Interest only loan versus a standard loan repayment? The only additional costs should be $5-10/month for an offset (can i get this free) and $190 or so in charges to setup loan? or is there usually other charges/fees levied?

Thanks .
 
Please see below


Unfortunately I don't /haven't had the time to assemble a property team. First timer here - haven't found anyone in Perth that has the calibre of some of the mortgage brokers posting on here .


Jess Peletier

http://www.seedfinancial.com.au/


Colin Rice

http://financeyourproperty.com.au/


Good luck with the Saturday thing.[/COLOR]


That said... i assume without a broker to provide pre approval I need to go into a bank? Any that I can walk into on a saturday? And how do they go about proofing/checking my LVR - do I just bring a bank statement in of my cash accounts to knock the LVR below 80%, a payslip, and woila??

dunno what might be open saturday, take id, payslips, savings acct, proof of existing loans, what you pay for rent, PAYG summary for 2014 etc


I have a settlement agent - family friend though, so should I be concerned that settlement agents may not be all created equal? Is there work quite regulated/compliance based, or is there an additional quality in having a good one that cheap is not always necessarily best?

as in all things, price doestn necc predicate quaility, legislation provides some good cover of competence............


For first home buyers I haven't heard of anyone hiring a lawyer to review the contracts... should I be? And where do i start - i thought a lawyer would charge an arm and a foot for something which for them i'm sure is quite simple... :( I think I'm savvy enough to read through it, could be wrong?

its something that I always recommend - we all have choices. Its not just about the wordings the loopholes and jargon, its about making sure that you are buying what you believe you are, and not so you get some "bonus" .


Should any checks with external consultants be done before signing now (and not just at the pre settlement date) and paying my deposit? I assume becuase of the speed these land releases go one has no time for hiring a lawyer (and the costs etc involved) to review standard signing? Don't think any other third party consultants are required at this stage? Correct me if I'm wrong please. Does it change if I note the fact that final development plans/ engineering plans are still awaiting council approval? As such they can't note any easements on the stages, although anticipate none... not sure if this needs to form part of the contract to be signed, however I anticipate the clauses are a catch all in the sales contract in the event to cover them for any easement that pops up... regardless of how unlikely...just so they aren't legally liable down the track.

review your contract and what its subject to. Assumptions make one a donkey

Great to hear pre approval doesn't lock you in - so now I just need to get some sorta pre approval asap! Again - do lenders operate on a Saturday?

Google is your best friend im sure

Interest only loan -, but you retain the same net loan balance in paying down your loan - correct? or have I missed a principle here?

Its pretty much right

Are there additional costs in setting up an Interest only loan versus a standard loan repayment? The only additional costs should be $5-10/month for an offset (can i get this free) and $190 or so in charges to setup loan? or is there usually other charges/fees levied?

depends, some lenders zero, some lenders an annual pro pack fee. too early to get into that sorta depth

Thanks .

This reads like Sydney thread, I didnt expect the Perth market to be that hot for new land -where is it ?

ta

rolf
 
If you are super savvy with a scanner/email/Skype, you could contact Rolf above. Your broker doesn't need to be local, just requires prompt access to your information to assess.

pinkboy
 
Hiya

I'd take a deep breath.

If I'm reading this correctly - you're purchasing a block of land in Perth.

Can't you simply make your offer subject to finance and then contact a broker/banker to arrange your loan?

That's the usual approach - even with land in Perth. Just done a couple last month and there wasn't the same level of urgency - there were also 21 day finance clauses in place.

Agree with Pinkoy on contacting Rolf too. I know there's a whole "brokers shouldn't be recommending other brokers" mantra at the moment but I don't really give a stuff. Rolf knows what he's talking about and I'm sure would be willing to help.

Cheers

Jamie
 
Thanks Rolf for your responses.

Re: settlement agents, I was mainly alluding to whether the majority of their work is legislation based...i assume that in liaison between the developer's settlement agent and my own that any issues would be sorted.. just didn't want to go with an agent (family friend) who was cheap, but who ended up transferring or settling incorrectly and voiding the legal title ... well i don't know if that's even possible, but I don't know what's impossible either when it comes to a good versus incompetent settlement agent. Or is the process generally straight forward compliance - so no need to lose sleep on this?

WHat do you mean by 'buying what you are, not a bonus' are you referring to property spruiking and the likes? In this case it is just a straight out land at a straight out price... no promises of rental or anything. My only worry is whether a lawyer is standard practice to review the terms of the general contract: restrictive covenants and the like. Tbh it all seems quite open to protecting the seller - like i said potential for easements to arise - but otherwise I coudln't see anything weird. The only other iffy was obviously estate requirements on what has to be built and what can be... but with no prior building experience I don't think I will be able to judge what is onerous or will add too much extra to costs until i dip my feet in the waters.

The actual sales appointment though is the signing and deposit... so I assume process wise if you want someone to review the contract you will have to do so with the general contract provided upon request.All other buyers appear to sign on the spot than take the contract away prior to signing.

Ok, liking the sound of interest only loan with unrestricted full offset account.

Rolf - new Mason Green estate... Piara Waters. Bordered by Mason Road, Wright and Wharton ROads, and the southern border is Armadale Road.

Public release/adverts were today... stage 1 and 2 were released to VIP email subscribers previously.

@pinkboy - haven't used skype on the computer... mobile yes. I can work out a scanner, email certainly. Gen y :)

@Jamie M - I'm not sure how the sales process will go. My appointments tomorrow lunch. Will I need to clarify ahead of the signing, or during the signing that the contract is subject to financing going ahead pre settlement? You already pay a non refundable $2k deposit though? So I assume 'subject to financing' only covers the inability to cover in full at settlement?

Rolf - what are your thoughts on everyone's recommendations? I just need a pre approval for deposit/signing purposes, then can take the time to decide what I want in terms of lender.... or would you prefer I handle this with the local Perth recommendations you gave? Seems like a mortgage broker can be interstate without any issue in service/offerings?
 
Any comment re: financing subject to easements?

Is there a standard practice where engineering drawings are not yet finalised given how fresh the estate is - given people are signing and paying the deposit already, is it just a balance of risk of proceeding? Or is it usually accepted practice to sign, pay the deposit but have it subject to review of easements prior to release/settlement of title?
 
STOP.

While they arent making any more land, they will have some more to sell you for a similar price next week.

The sales agent doesnt need a pre approval to sell you the land. This is a pretext to refer you to their broker, or to get you to waive the finance clause.

Even if settlement doesnt happen till october I suggest getting a finance clause, getting a build contract, getting a valuation on both and getting a formal approval before letting the finance clause lapse.

Call it a dry run for October, itll show you whats really involved and will cover off on most of the risks of buying a house and land package from a new housing estate (of which there are many).
 
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