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Anyone lost their deposit or paid big penalties due to finance issues?

Discussion in 'Property Finance' started by TMNT, 29th Sep, 2015.

  1. TMNT

    TMNT Well-Known Member

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    completely sticky beak thread,

    anyone, lost their signfiicant deposit or more for not being able to get finance on something you thought wasnt going to be a problem in getting finance, whether it be yours or the banks?
     
  2. Tranquilo

    Tranquilo Well-Known Member Premium Member

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    No not to that extreme, but the bank did stuff me a month or so ago with not sending me signing papers in time. So the vendors solicitor wanted to charge a $2,000 penalty fee for being 2 days late. Lucky my solicitor at the time wrote a big letter saying how stressed we were and this was out of our control. In the end it work out OK
     
  3. chylld

    chylld Well-Known Member

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    Low val -> had to cough up an extra $76k, but not really a loss since it's the same as paying down the principal straight after settlement.... I suppose....
     
    cheekykoon likes this.
  4. Redwood

    Redwood Well-Known Member

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    Hi stickybeak :) - I have not but have seen many clients in this situation.

    Settlement delays have been regular recently due to surprises with LVR lower than expected (particularly with investment lending) and low vals with OTP apartments meaning that investors need to cough up more cash than expected. The settlement delays result in penalty interest and developers regularly charge the interest even if you let them know upfront. This can be quite stressful for the end client and the broker. Only thing I can suggest is upfront planning but there are always surprises. I have many clients funding with non bank lenders and Genworth restrict LVRs on high density areas resulting in a low LVR, this usually means the client is tight for cash flow, resulting in a delay - ---- or they cannot do a valuation on time. Either way plan upfront, forecast cash flow with a broker and ensure your property guys (if you use them) tells you everything you need to know.

    Cheers, Ivan
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The only time I saw someone loose a deposit it was because they couldn't qualify for any loan. It was made clear before they signed the contract that their odds of qualifying for a loan on this property were negligible, but they had an emotional attachment to it.

    It was a combination of their income being well outside normal affordability criteria and a rural property in a remote area that nobody wanted to lend money against. This was made clear to them as well as the consequences of the money they were liable for, they were adamant that a miracle would happen.

    I've seen a few people get into trouble with off the plan purchases where a low valuation meant they needed to come up with a lot of extra cash at the last minute.
     
  6. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Thankfully I haven't experienced this with any clients yet.

    I have had some close calls though with clients where I've advised to not go unconditional on a purchase but they proceeded anyway.

    Cheers

    Jamie
     
  7. wylie

    wylie Moderator Staff Member

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    I started a loan application mid April this year to borrow 80 percent of $700K. Had to go low doc due to my income position. Arranged to prepay interest in advance. Lender checked all my ID and figures and came back to get certified copies. Offered $480K. I said "thank you very much". Loan docs finally are issued at $450K early August (yes... took them 3.5 months to get organized :rolleyes:).

    Broker and I have pulled out all our hair by now and are curled in foetal position in our respective offices. Day before settlement they give me figures- $9K short. I scrape up $9K and settle.

    There were some sneaky charges and a "risk fee" of over $5K. My broker has fought them and I'm due to get my risk fee back "any day now" :rolleyes:.

    Their incompetence has cost me $15K in extra tax. I'm paying 1 percent more than a big four bank plus a monthly fee. As soon as my tax is done I will refinance using last year's income figures and they can go stuff my loan where the sun don't shine :p.

    Bank staff - can't live with 'em... can't shoot 'em. (I think that saying should be "husbands" but it works just as well for hopeless, incompetent bank staff.)
     
  8. AusMover

    AusMover Well-Known Member

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    Hi Wylie... Which lender was it please? :) ... just for us to be beware.... :eek:

    Thanks
    AusMover
     
  9. Jessproperty

    Jessproperty Well-Known Member

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    Twice our broker has taken too long with loan paperwork and their solicitors sent letters demanding us to settle within 2 weeks once 42 day settlement was complete. We made it over the line both times and needed to pay a fee for it...it's not as stressful now knowing there is a 2 week leeway if paperwork hasn't come through as long as sellers are understanding, which both times they were.
     
  10. TMNT

    TMNT Well-Known Member

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    In qld. If you are late by even a day the vendor can terminate and keep your deposit
    I almost lost my deposit years ago when the vendor initalled the settlement date and edited by two days. And we settled late.

    And tried everybtibg to keep our deposit

    Yes horrible vendor. But we managed to get out of it on pure luck.

    We couldnt prove or disprove that we didnt edit the settlement date. At the end of the day we were still late even had the settlement date had not been edited. So it was a good result

    Almost$50k!
     
  11. neK

    neK Well-Known Member

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    Situation could have happened with my sister earlier this year.

    Should never have even got to that stage.... especially seeing the vendor asked for 11 week settlement instead of the usual 6 weeks. Head broker should have been more on the ball with bank policies.

    To help mitigate the risk, i gave her full access to all my accounts and equity loans.

    The worse that could have happened is that she would have lost her 10% deposit (6 figures) and the vendor would have been able to resell it for more.
     
  12. wategos

    wategos Well-Known Member

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    Its often those that can least afford it that lose their deposit. I knew of one guy (long time ago) who lived in his business workshop for 2 years to save 30K for a deposit. Then because he was self employed the bank refused his loan despite having given a preapproval earlier. Noone else would give him the loan either. He lost the deposit (2 years hard savings).

    I prefer the Queensland system where a clause enables buyers who are refused credit to back out of the contract penalty free.
     
  13. neK

    neK Well-Known Member

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    System is good and works until people figure out how to abuse it.

    Stories of how people deliberately use that clause to weasel their way out of a contract.... Stuffs it up for the genuine people
     
    Last edited: 30th Sep, 2015
  14. wylie

    wylie Moderator Staff Member

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    Not sure I want to put it "out there". I'm happy to let you know if you message me.

    Much as it cost me money, I did get a loan that I was told by another broker and a bank chap was "nearly impossible" with my earning capacity (having assets seems not to matter :(). What I lost this year cannot be regained, but going forward I have a loan. I'll be refinancing as soon as I can though and will pull out more equity at a cheaper rate.

    So, hopeless as this lot were I'd hate to know they may somehow see their name here and next thing I might have my loan called in :eek:. Once I've refinanced I might reconsider putting their name up.
     
  15. SueA

    SueA Well-Known Member

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    Son(builder) going through this atm. Bought at auction, public trustee, termite damage. Had previous approval for 390k. I Told his partner to check with their broker (her old boss) if they could even get finance on damaged house. Told yes but may need to add more money. Paid 5% 42 day settlement, They chased broker on and off for info but vague. 5 pm day prior to settlement say I can't get finance at St G, or Macquarie. He calls son on day of settlement to say he had now lodged app with commonwealth for a builders construction loan. Son.s boss has quoted 17k to fix, however son can do it himself. Still waiting for broker it is 2 weeks now since last app and costing 600 per week to public trustee. Called my broker but she can't touch it till last guy is finished. Not sure what else he can do.
     
  16. TMNT

    TMNT Well-Known Member

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    thats horrible,

    on settlement day they reapply for another one!
    terrible,

    at least it wasnt qld...well I hope not
     
  17. SueA

    SueA Well-Known Member

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    Yep, qld. Why is that worse.
     
  18. TMNT

    TMNT Well-Known Member

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    in other states, if you are late, there is certain protocol that must be followed by lawyers, basically letters back and fwd saying you must settle or else blah blah

    in qld, if you are late onsettlemetn, no letters etc are sent, basically, you lose your deposit, on the spot, so if your vendor has agreed to extend or whatever thats very lucky

    I learnt the hard way years ago, never again do I want to experience that :(
     
  19. SueA

    SueA Well-Known Member

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    Well his luck just ran out , broker told him yesterday commonwealth didn't happen either, we can't just take it over at the moment as I have had surgery so no hard yakka for a few more months, although I still think it is a good deal, paid 337 spend 20, a recent sale similar but with no ensuite sold for 410, His boss has a mate who invests so he is looking to pay out son and take over so that would be good, will know that in a few days apparently. Next idea would be for us to lend up to his 20% and wait for revalue to pay us back. But he now has 3 hits on credit file., that may not even be possible. Wish broker had got onto it a lot earlier, would have had time to look at more options as he has to pay the 600 per week to hold it
     
  20. Dale

    Dale Member

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    Why on earth did it take so long for this broker to get back to your son? :S