Broker says no, Bank says yes?

I agree with Rolf that pre approvals are for the most part a waste of time and an extra credit hit. A decent broker will be able to asses your capacity and grant you a broker pre-approval.

The only time I do them is for a construction loan where land is purchased first and a construction contract is pending. Once the construction contract is on the scene then its sent to bank to convert pre app to approval.

 

yes, this is the thing that irritates me and some of my friend to start investing in property last year.
I've approached multiple Mortgage Broker and all of them says no and advice me no to invest in property.

But somehow going direct with CBA, it allows me to buy Park Ridge for $300k .

So my suggestion to all of you who is working casually or multiple job in Australia, go directly to the bank rather than using Mortgage Broker and buy small new OTP property like in my case Park Ridge.

Since then I couldn't be happier as an investor in property market.

 

I've tried to confirm approval verbally and they told me if I me still concerned I can get a certificate of approval if I want. Is this an iron clad guarantee I have conditional approval?

 

So how can you go and put an offer in if you don't know what you can afford?

 

Cause the broker will be able to tell you your max borrowing capacity in conjunction with funds available for deposit + costs, if you supply the information required to do so.

 

I always confirm borrowing capacity etc. via email along the lines of max purchase price is xxx.

This is determined by sending a "Fact Find" first collecting the very same info the bank credit officer will use to asses and approve the loan.

When you have done hundreds of loans you get to know what the requirements are and how to present the deal in the format the lender can digest easily. AKA, make the assessors job as easy as possible!

 

If CBA approved your loan and the brokers you approached could not one of 2 things have occurred;

1. They where duds.

2. They where honest about your situation and the bank may not have been.

Going direct to the bank is ok if your situation is simple but the more complex it gets the more this approach is fraught with danger. Im biased though

 

"Certificate of approval", otherwise known as a pre-approval.

Personally I think pre-approvals are a mixed bag.

In a lot of cases we know right at the beginning from our analysis that many clients are going to easily get the finance they require. Not much point in a pre-approval, but if it puts the clients mind at ease we'll do it.

We're also seeing a lot more cases which I'd define as 'marginal'. High LVRs, tight servicing that's reliant on non-regular income. In these cases a pre-approval can be worthwhile as it gets these issues addressed before purchasing.

What is pointless is getting an other pre-approval simply because the first one has expired. A second pre-approval doesn't give you any new information, it just creates more work for everyone.

Unnecessary pre-approvals are frustrating however as a pre-approval is about 90% of the work to get a loan approved, but about 60% of them expire. Essentially we do 90% of the work for about 40% of the pay.

 

Any type of approval or pre approval is not iron clad, it can come undone at any time, for instance you lose your job before formal contract for money signed, there goes the offer, or they may have conditions you cannot meet, or the property may not meet the lenders requirements.

 

@Colin Rice Yes, I guess that's because I work in Coles after hours part time while working in the office on daytime casually in the past 5 years.

But luckily my bank knows my financial condition so I can get my first IP that is Park Ridge H&L package .

 

Still baffles me how 3 brokers couldn't work out your lending capacity

All the best in your journey.

 

Tekoz, it really should not matter, unless the bank has different product and criteria for the brokers line of products.

A broker may have told you no because they could not be bothered, I have met plenty of lazy brokers, or not competent ones, or they missed something, so it is not because you went direct that you got the loan, it is not that simple, there could be various reasons (did you drop a brown paper bag under the table ? )

But of course do what suits you, I hate going to the bank, so last time I did it that way was a long time ago, but that is me.

 

I personally think it is dangerous to go direct to bank if going beyond one property purchase.

The issue here is not brokers v banks but finding the right people to help you. If you have a modern car and get a dud mechanic you find a better one rather than working on it your self without the correct tools and knowledge. Same applies to MBs or any other profession.

Baffles me how people will trust a bank employee who has to tow the party line, is an employee with an employee mindset and probably not an investor v engaging a self employed, entrepreneurial, active investor to help you get to where they already are!

DIY finance may "feel right" but unless you understand the intricacies involved you will eventually get stumped and not know how to unstump the situation, or even understand what has actually happened.

 

Tis hard enough finding good brokers, let alone swimming in the shark tank !

 

This all day long. I would say a third of our new clients into the business is people coming from their banks being told "You can't borrow anymore" - only to find out they can borrow a further 1mil+.

There's substantial differences in lender borrowing capacity structures which unless you are lucky and pick the right 1 lender at the right time out of the dozens in Australia, you're going to be short changing yourself. Then factor in that any strategically minded investor who wants to maximise their borrowing capacity will end up using multiple lenders - it's a minefield for the uninformed.