Confused about broker advice

op, is this otp?

 

We almost always recommend clients ascertain a pre approval close to the time they are looking to purchase a property.

Even if the application is strong - it will help identify any issues and thus we have time to attend to issues. These days is very common for clients to have undisclosed liabilities (which all show up on a credit file), arrears history, etc.

Its more work for a broker (if a client doesn't proceed with a purchase) however this strategy would be in the client's interest.

 

Undisclosed debts is the main reason I do credit checks for all clients prior to submitting ANY application to ensure we've covered off, it's not a good look if you put an app up to the lender and they find out the undisclosed debts before you do.
Only a few lenders will do a full credit assessed pre-approval these days anyway, the others are just baseless computer generated pre-approvals.
If a pre-approval is applied for but not used then the credit file/score is affected which IMO is not in the clients best interest. A Pre-approval is not a guarantee of formal approval in any case.
Each broker has their own way of approaching this and views on pre-approvals, no right or wrong way.

 

some lenders to a light assessment. If you find a property they may actually look at the content of your payslips and adjust income down because of the way the pay is structured, as an example, and this could mean your pre-approved loan amount goes down.

 

Hi,
No looking to buy established homes. Broker advised to avoid auctions but 90% properties go in auction in the areas I'm looking at.

 

It's been a few days since I've posted this and have had no luck with private sales.
Real estate agents straight away refusing subject to finance offers. Apparently, they want unconditional offers even for private sales.
I'm planning to talk to my broker and explain this situation and ask to do a formal pre-approval with a decent lender.

 

Doesn't sound right, as in it's too broad, you're saying all properties where you're looking are sold unconditionally even when they're not sold at auction? Big risk to the buyer, any finance is going to be subject to a valuation, if the val comes in low you could be in a bad situation.
What suburbs ?

 

Since I've posted this original post, I have had 1 property where the agent refused to take my offer with conditions. Another property where the agent said he will only accept offers if pre-approval has been done and a 3rd property where my offer was rejected because of conditions, even though my offer was higher than an unconditional offer (that's what I was told). So that's 3 properties since November 1, 2020.
Looking at Carnegie, Murrumbeena, Hughesdale, Bentleigh East and some other suburbs nearby.

 

In a fast moving suburb its possible. Multiple buyers ready to go ready to pay at market price. So your choice is either to pay above market, to go uncoditional, or choose a different different suburb with less competition.
Your issue is that at 94% LVR no preapproval is worth the paper its written on. Preapproval is still subject to many factors. For LMI it requires further acceptance by the bank at the valuation stage, and also acceptance by the LMI insurer. The bank will have absolute discretion to not offer credit if it deems the risk too high.
If this is the suburb you definitely want to buy in, I would suggest you start talking to family and friends and float the idea of them lending you a few % of the property price in the event you need a backup maybe even as 2nd mortgagor over your property; your solicitor could help document this.

 

Ok so that's a bit different to what you said originally, 1 out of 3, thanks for clarifying.
Typical Agent speak when they say you must have a pre-approval, it's a load of BS and 99% of pre-approvals aren't worth the paper they're written on so you could easily just tell the agent you have a pre-approval but your offer is still subject to conditions. Going unconditional at that LVR carries high risk and I would strongly suggest not doing it.