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Can I back out from an approved finance?

Discussion in 'Property Finance' started by novice, 7th Oct, 2016.

  1. novice

    novice Well-Known Member

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    Hi all. Is it possible to back out from an approved home loan(investment)? we havn't signed anything as yet , just paid upfront fees( valuation only).
    we also haven't signed contract for the property we got financed for as yet but just got B&I done. Now we have changed our mind and do not wish to purchase right now. we know we will loose those fees already paid but we can live with it.
    so my question is
    1. Is this possible to reject approved loan offer?
    2. Will it affect future loan application with same lender or different?
    3. Am I asking stupid question!!?

    Thanks all in advance for inputs.
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Should be possible to back out of it based on info presented so far.

    Whether it'll affect future borrowing depends on whether they got up to the credit check part yet. Its preferable to have "withdrawn" than "declined", but doesn't sound like it was up to that from what you're saying.

    Are you doing this through a broker?
     
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  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes. Bank has just made an offer which you will need to accept before you are in a ninding contract.
     
  4. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Rather than cancel the loan application, tell them you're not proceeding with the contract due to an unsuitable B&P report. Ask them to roll the finance application back to a pre-approval. That way you don't have to go through the whole process again when you do purchase a property, you only have to get a new valuation done.
     
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  5. novice

    novice Well-Known Member

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    thanks DT .yes it was through a broker. we got conditional approval and then the valuation was done yesterday. we have not heard from the broker about final approval but we know it would be approved.
    does it make any difference going through a broker?
     
  6. novice

    novice Well-Known Member

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    thanks for reply.binding contract with bank or vendor? at this stage we have not signed contract with vendor. we have made finance application through a broker and it was conditional approved . after valuation is done(which was done yesterday) we supposed to get final approval. so technically we havn't signed anything other than signature on the application form etc.
     
  7. novice

    novice Well-Known Member

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    Hi Peter. Thanks for reply. we are actually looking for a land in a new housing estate in melbourne . we have to put 10% now and the settlement is next july. loan amount would be same though. we were thinking we could save more during the year and get less loan. so if I tell them I am not going to buy this year but wish to buy next year coz of personal circumstances what do you think would happen with my future application?
     
  8. Joynz

    Joynz Well-Known Member

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    Does the extra size of the loan matter?

    If you are already approved for more than you may need, couldn't you just accept the bigger loan and then pay it into the offset once you draw down the funds next year?
     
  9. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    You don't have to proceed.

    But don't waste the credit hit and do as Pete mentioned - have it turned into a pre-approval.

    Cheers

    Jamie
     
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  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The lender.

    But if you havent signed a contract with the vendor there would be no binding contract with them either.
     
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  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes it matters.

    A bank will only lend you a % of the property value. If over 80% you will pay lmi and a higher loan amount will result in a higher lmi fee.

    If you borrow extra and park in an offset account there will be tax consequences too.
     
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  12. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    After 3 months the loan application would need to be reassessed, so you'd have to re-apply shortly before the land settles.
     
  13. Joynz

    Joynz Well-Known Member

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    Oops - sorry Terry, put my query in the wrong thread!

    Thought I was actually replying to another thread about someone wanting to with draw from a loan for a land purchase to title in a year's time

    Insomnia at 2.30 am - it's the danger zone!
     
  14. novice

    novice Well-Known Member

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    hi Joynz.. yes for me extra size will matter as it will limit the serviceability for the one I am willing to buy next year.
     
  15. novice

    novice Well-Known Member

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    lol.. yes . may be watching Insomnia movie (Al Pachino) would help to neutralise ...
     
  16. novice

    novice Well-Known Member

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    Thanks Pete. I think I will do that. But not sure what and how to tell my broker !!!
     
  17. novice

    novice Well-Known Member

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    Yes.. thank you.
     
  18. novice

    novice Well-Known Member

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    thanks Jamie. Yes I will ask the broker to turn back to pre approval. Not sure what reason to tell her .. well the true reason is after building and pest inspection of the property we wanted to buy , we have changed mind as per Inspector it would cost us major $$$ in coming months.. as its Inter state investment we wont be able to over see if we were to get tradesmen to fix things. the big turn off was the roof as needed to be replaced as per inspector.. and termites
    So now we have decided to buy Land only in a new housing estate in Melbourne (also Inter state for us)
    but we will have 1 year to save more and reduce loan size.
     
  19. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    @novice tell the broker the truth, they might even have some useful input. Any decent person would be understanding of exiting a contract under a B&P inspection. If your broker does have a problem with it then they wouldn't have your best interests in mind.

    People also hate being fed BS.
     
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  20. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Have had this exact same situation occur just last week where the application has been submitted to bank and B&P caused the deal to fall over.

    An email to the bank explaining what happened is all it took to convert the application to purchase to a pre approval in anticipation for the next purchase.
     
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