Assessment Timeframe

Hey all, got a query on my situation and interested in hearing others' thoughts.

- Buying property for the first time (though will not be eligible for any FHO benefits)
- Approached broker who developed a borrowing capacity estimate based upon the information supplied
- My offer on a property has been accepted subject to finance
- A 28 day finance period in the contract, I am currently at day 11
- Only one lender has been approached on Wednesday last week - ING, who yesterday advised that the application likely will not be processed for further 6 business days.
- While the broker is extremely confident with my application (20% deposit, consistent work history, excellent credit history, no debt other than a few thousand in HECS that's progressively being paid off, valuation of property is completed and as expected) this likely takes me to day 20 at least which makes me nervous having never gone through the process before! Does not leave much timeframe if ING do come back with any queries or simply reject it.
- Broker does not think submitting another application at this point is necessary

Should I be pushing more to ensure the risk of ING returning with something unexpected is mitigated? I do trust my broker, but being completely foreign to this situation I would appreciate the thoughts of others as most in my personal life have just used their usual big 4 bank (which while I understand do offer higher rates, their processing times are significantly faster).

For what it's worth the ING calc tool computes an estimated capacity of 14% above my requested borrowings.

 

I think your OK - just have a chat to your broker (at this stage, with that much time to go, don't think its worth submitting to someone quicker). ING are a bit slow at the moment.

 

Was able to approve finance with First Mac in 5 business days, 360k, 80% IO.

Any reason to go ING over others?

 

Thanks gents. I discussed with him today - he said he had checked and Macquarie are currently experiencing circa 5 day assessment periods. If ING maintain the timeline of next Monday/Tuesday it does leave 9-10 days to resolve/find an alternative which he reckons is workable so have decided to hold off on jumping onto a 'backup' application at this point. However he reiterates given his confidence in the strength of my current application, he can't see there being any issue in being approved straight up with ING.

He did say he could compile another application so we have it ready to go immediately or if my feet continue to itch can be submitted later this week just to get ahead in the event of some frustrations. I don't know if the temptation to do that is just me being paranoid though :/

ING was his recommendation, offering the best rates and the zero fee international card which fits in with the fairly regular times I am overseas throughout the year. Happy to go along with them on that basis, but have also had friends who have had dealings with them and no issues. I did not do my research on the assessment timeframe though, but guess when we're talking about a 30yr timeframe and your first property it's all about the end result rather than an additional week of anxiety!

Still more than happy to hear feedback or thoughts of anyone been through a similar situation.

Cheers

 

If this is true then I suspect you wouldn't be jumping on here to ask others to confirm what your broker has already advised, but when first time buying property it can absolutely be nerve racking and I can sympathise with that, I was the same!
ING do typically take longer than others, around 8 business days usually, but you have plenty of time up your sleeve.
Your broker is looking after your credit file by not putting multiple applications in with different lenders - have faith that they've got your back.

 

Another tip, (for next time),
To avoid these kinds of stresses, I've always negotiated a longer settlement period just to give me a little more wiggle room. Circa 6-8 weeks works well.

 

28 days finance clause is more than enough. Usually recommend 21 days for finance and for settlement 42 days (6 weeks) is pretty much the standard unless there's a specific reason to settle sooner or later than that.

 

Not sure where you are but no markets are booming; worst case you have to ask the seller to give you some extra days for finance approval if it pushes out beyond the 28 days. They will no doubt oblige as I'm sure they want to close the sale and wouldn't want go back on the market waiting for another offer.

 

You'll be fine

 

Sure, it's standard, but doesn't mean I can't ask for more to reduce my risk. Plus every loan application I've ever done had had additional risk (smaller deposits, etc). I normally just give myself an extra 10 days or so to have a buffer up my sleeve.
I used to be a project manager by trade building in buffers and transfering risk is the name of the game.

 

If it's taking any longer than the time frames I mentioned above something's gone pretty wrong. Your strategy works well when there aren't multiple buyers for the property you want to purchase, sometimes a faster settlement or shorter finance clause can be the deciding factor for the sellers to choose your offer over someone else's

 

Sure. However it worked fine for me in the recent Sydney boom. I found sellers were more focused on price than an extra week or two on settlement. Never had a rejection to them post agreeing on price.

 

When you've got a PAYG income, reasonable deposit and negligible debt, the approval of the loan isn't really a big deal. If there was a critical problem that's not evidenced in your payslips or bank statements (which are easy to detect), ING's automated systems would have likely picked them up almost immediately when the application was submitted.

At this point you've passed the first hurdle. If there are future problems, 99% of are likely to be a very general request for some clarification and easily dealt with.

I'm guessing the reason the application is with ING is because they have very competitive interest rates. The downside of a lender having cheap rates is they get flooded with applications and their time frames blow out.

I appreciate that applying for finance is a stressful process. Please be patient. Your broker has told you want to expect and nothing you've said is contrary to what other brokers have suggested. Hang in there.

 

Thanks guys, have received the loan offer Very pleased.

My broker was certainly very upfront and honest which I appreciate. I guess going through the process for the first time, it's intuitive to think if ING's process takes 10 business days and the result for whatever reason didn't come through as expected then perhaps it will make for a stressful time at the back end of things. I think also from a personal perspective for an unfamiliar situation as important as this I like piecing together evidence from a couple of sources before accepting - just the conservative way I think (which to be fair has served me well thus far in personal finances & career). I feel I got a great property, in a brilliant location that makes a lot of sense for both my personal situation and also from a long term investment point of view.

30 year mortgage taking me to the age of 55 is eye opening though! But can see the pipeline of work over the short-medium term coming for the WA resources sector so I feel it's a good time to get into the Perth market - especially in such a high quality location.

 

Sigh of relief !!!

Keep in mind that a lot happens in 30 years. At some point in the future the economy will heat up again, inflation kicks in and rates will go up. Whilst you won't like it at the time, sooner or later salaries will increase. Inflation will devalue the mortgage as the amount will still be the same, but it's value compared to your salary will make it more manageable.

Most people will struggle with a large mortgage at some point. Eventually it does get a lot easier. Unless people increase the loan over time, most people will be on well top of the loan in 10-15 years and will probably pay it off well before year 20.