47sqm apartment anyone?

His property was too small so bank walked away

 

$41,000 lost. That's would hurt a lot at that age. The bank should compensate him

 

That sucks.
They really don't look happy in that photo..

 

I wonder why whe there there were proper approval in place or everything is just on the phone :-/

 

The abhorrent part of all this is the bank waited until the day prior to settlement to inform him of the problem. They would have known the moment they got the valuation. They have every right to decline the loan when they realise the property is outside of their lending criteria but by not informing him in a timely manner they denied him the ability to obtain alternative finance. For that he should be compensated.

Had he gone to a broker this wouldn't have been a problem at all. There's plenty of lenders that would do this, even at a high LVR. The numbers suggest he needed a 90% lend. I can think of several lenders that can do this, even in the CBD. The NAB definitely isn't one of them.

 

Our friend were on conditional approval only to have it denied by the bank close to their cooling off period due to 'undisclosed debt' (which was disclosed) not as severe $$ but I wonder how the bank missed all of these.

 

His property was too small so bank walked away

Surely NAB can't walk away after an approval? Could've been a pre approval I guess, doesn't sound like he had a subject to finance clause either....Either way what a mess!

 

Who knows, light on solid details, they can go to other lenders, vendor can't be unreasonable.

Sounds like there was no approval at all possibly.

 

mods: merge with other thread?
47sqm apartment anyone?

 

I think there's a few factors here.

1. Small 1 bedroom apartment (47sqm) in Melbourne, which has a well known apartment oversupply, particularly in Melbourne.
2. Blacklist suburb- "NAB has previously identified Melbourne CBD, St Kilda Road Central and Abbotsford as postcodes of future risk, where it was capping loan-to-valuations for new lending at 80 per cent".
3. He had a small deposit, which made him vulnerable to the valuation and he was obviously nowhere near 80%.
4. He is a student that works part-time so it's unlikely that he currently has an income high enough to comfortably service the loan.

I feel sorry for him. 41k is a lot to lose + possible further financial penalties from the vendor for the contract falling though. It does look unprofessional from the bank, but sadly stories like this are not as rare as many people think. I've read plenty of posts on Somersoft/Propertychat of finance being denied even when pre-approvals were in place. Usually it happens at auction when the banks believe a property is overpriced, which can easily happen if it's a rising market and banks are relying upon valuation stats that are 3+ months old. Alternatively it can happen if people are highly leveraged and relying on equity from other property to fund a purchase. 99.9% of the time the contract price will be what the bank will usually value the property as, but sometimes a spanner gets thrown into the works and if you're highly leveraged you've got a lot less negotiation power.

 

@chylld yes sorry didn't realise there was an existing thread, feel free to remove mods

 

Sounds like the bank manager screwed up. This guy needs to get an approval from Commonwealth ASAP. I hope he does not need LMI!

 

Bank manager definitely screwed up there by not disclosing the risk / lending policy... knowledge that most of us here might take for granted.

What irks me most is how the article is engineered to elicit more negative sentiment about how banks treat first home buyers. Friend just shared the article on FB saying: "Well done by NAB. We've got a genuine first homebuyer in a market that's trying its hardest to push out actual first home buyers and they screw him over royally. Nice work"

With my comment this thread is now of equal size, up to them to combine if they want

 

@chylld yeah agreed, and as @2FAST4U said, there was a few things there that definitely didn't make him the best candidate for a loan

 

That's sad, so i only get comfort only when the house is settled.

 

If you have a conditional approval, then you do not go unconditional until conditions satisfied, once that is done and val comes back ok, not much likely to go wrong from there.

Do not read too much into a story that provides little detail.

 

And this is why OTP is rarely recommended as a first home buyers investment property.

 

Can't find anything in the article mentioning OTP?

 

Nor do I, nor any indication the bank has done anything wrong at all.