'conditional approval' and another question

Discussion in 'Loans & Mortgage Brokers' started by CraigJ23, 13th Jul, 2021.

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  1. CraigJ23

    CraigJ23 Well-Known Member

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    I just have a couple of questions:

    1. I received 'conditional approval' for a home loan 'subject to executed contract of sale'. Does this mean I have been approved for the loan and all I have to do is give the lender the property sale contract signed by both parties?

    2. My loan application is for my owner-occupier home that I will live in. If in future I want to move out of the home and rent it out, would the lender need to be notified of this and agree to it?

    PS. Thanks to all the people who answered my other questions. I guess the broker got the result in the end.
     
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    1. Yes. The lender will also need a suitable valuation for that property (broker will probably organise this, it's not a big deal).

    2. Strictly speaking, you should inform the lender when the property becomes an investment. I'm aware that a lot of people don't get around to it for various reasons.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    1. potentially yes. Subject to the conditions listed, if that is the only condition then yes.

    2. This will depend on what is in the loan contract when it comes. Probably you will need to agree to notify them if you ever rent the property out.
     
  4. CraigJ23

    CraigJ23 Well-Known Member

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    Does the valuation occur at this stage - I thought it would have already been done. Valuation is not one of the conditions listed in the 'conditional approval' document - the only condition is providing the executed contract.
     
  5. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    The valaution can only be done once you've found the property, agreed on a price and signed a contract. The valuation cannot be done before a contract is in place, because the valuer would not know what the purchase price is, nor would they be able to allow for any special conditions in the sale.
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    perhaps they did the val off the back of an unsigned COS
     
  7. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Just realised the OP is in NSW. NSW likes to do it a bit differently to the rest of the country, where they generate a contract of sale, but it's not signed until it's unconditional. In this instance the valuation would usually be organised prior to signing the contract.
     
  8. CraigJ23

    CraigJ23 Well-Known Member

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    Once 'conditional approval' is given, is it still possible for the lender to pull out?

    My broker is asking me for some more documents which I hope is just formalities so that it can move to formal approval.
     
  9. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    Until the loan is funded, the lender can pull out. The additional documents may reveal further information that may give the lender reason to not want to approve the loan.

    In most cases however, the additional documents are a bit of a box ticking exercise and you've got nothing to worry about.

    The best person to ask about your chances of success is your broker.
     
  10. CraigJ23

    CraigJ23 Well-Known Member

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    What can be deduced from the documents is that over 5 years ago I was earning below the threshold for paying back a student loan. I'm hoping this won't have a negative impact, because I have been in a higher paid steady job for over 5 years now.
     
  11. Lindsay_W

    Lindsay_W Well-Known Member

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    Lenders won't care about what you were earning 5 years ago, they care about what you are earning now.