Auction without a pre approval

Discussion in 'Loans & Mortgage Brokers' started by Saitek, 25th Nov, 2021.

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  1. Saitek

    Saitek Active Member

    Joined:
    25th Nov, 2021
    Posts:
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    Location:
    ROUSE HILL
    My broker has submitted my pre approval to MeBank on Tuesday and we may not receive it in time for an auction I am interest in this weekend. This will for a 2nd investment property.

    It will be a joint application -
    Total income of applicants $176.6K p.a
    Current rental on IP #1 $39K p.a
    Proposed rental on new IP $30K p.a
    Savings $179K + $40K for stamp duty + other costs
    We are currently renting at my parents at 650/ fortnight

    for the new IP I will spend $890K and have $179K cash, so it will be <80% LVR and I will need to borrow $710K

    We have existing loans of 920K at the moment (existing IP)
    our DTI will be roughly in the high 6's

    What is the consensus on going to auction with our a pre approval (however my broker believes I won't have an issue with the funding)
     
  2. standtall

    standtall Well-Known Member

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    Location:
    Sydney, NSW
    If your broker has submitted the application, it’s very likely they think you would get the loan.

    It’s really a matter of personal preference. I have seen people attend and win auction while at a morning jog and then there are those who wouldn’t go unconditional until they have unconditional approval from the bank.
     
  3. Morgs

    Morgs Well-Known Member Business Member

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    I'd say unfortunately, there is no chance that ME will provide a pre-approval before weekend - they're very slow at the moment.

    It depends on your own confidence in your position and the broker's assessment of your position.

    In some instances if I'm confident that a client will be pre-approved (via my own assessment and due diligence) then I'm happy for them to go to auction without pre-approval, but in other cases I am not comfortable at all and don't recommend it.

    Have you discussed contingency plans should you commit and the approval does not come through from ME?
     
  4. Saitek

    Saitek Active Member

    Joined:
    25th Nov, 2021
    Posts:
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    Location:
    ROUSE HILL
    Thanks for the feedback
    I've been told our serviceability and dti is quite borderline so it might be a good idea for me to just wait for the next property.

    My broker believes there is no reason why my loan would be declined though




    Yeah Me bank have a service level indicator on their we page which show about 2 weeks for approval

    The only contingency plan is to go with another lender
     
  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    03 9877 3000
    Bottom line is you need to rely on your brokers advice. An opinion from this forum is not qualified against your actual circumstances so it's worthless.

    Quite a few people buy without pre-approval. Pre-approvals really are only necessary when the margins are fairly thin. If your broker is confident of the outcome, they you'll likely be fine.

    If you need further reassurance, then there are plenty of lenders that are sigificantly more generous than ME Bank. If your broker is confident of ME Bank, even if there is an unforseen problem you're almost certainly going to be able to get finance elsewhere.
     
    David Hui and Saitek like this.
  6. Deck

    Deck Well-Known Member

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    22nd Jun, 2015
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    Location:
    Goldcoast
    Make sure to ask for a 45 days settlement, banks are very slow at this moment
     
    Saitek likes this.
  7. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Location:
    03 9877 3000
    Make it 60 days. The first half of January is never a good time to try to settle a purchase.
     
    Saitek likes this.

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