Finance declined. What now?

Discussion in 'Loans & Mortgage Brokers' started by Bubica42, 23rd Sep, 2015.

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  1. Bubica42

    Bubica42 Well-Known Member

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    Thank you kindly for all your input. Much appreciated. I am not advocating for the builder, however, we would like a more even distribution of funds. We are not asking for 50% upfront. We are merely asking for just enough funds to be able to complete successfully each stage of the project. The bank seem to be happy to release up to 65% of funds once house is built to the lock up stage. We are not asking for more. Just that instead 5 at deposit,10 base, 12-15 frames and a massive 35 % at lockup, we are asking for 5 at deposit 20 at base, 20 at frames and 20 at lockup. Still the same amount and still the same outcome. It is a split level house, with lower floor and upper floor and almost an entire lower level bricked up and core filled before the upper slab goes on, hence the larger cost of base/slab. If it was your ordinary slab on ground scenario, I would have wholeheartedly agreed with bank. So hopefully they will see the logic.
     
  2. mcarthur

    mcarthur Well-Known Member

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    "we would like a more even distribution of funds" - why? Who is this "we"? What's the huge benefit for you if the builder gets money quicker (hint - there is none!) ?
    Your statement makes no sense if "I am not advocating for the builder".

    You are advocating for the builder. There is no other reason for you to keep writing what you have.
    Presumably you think the builder will a) not agree to build if you don't, b) thank you immensely if you do, and b) do a better job if you do.
    As regards a) - thank god you found him/her out in time and can get a new builder who will conduct themselves properly.
    b) and c) are simply unfounded optimism :). Truly, you may have scored that 1:1,000,000 builder. The odds of that are remarkably low though, and even more miniscule if you haven't actually experienced a few builds to know for sure.

    You've come here for advice, and the very experienced advice is (generally) to stop advocating for the builder (yes, you are) and go with the bank's rules.
     
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  3. Bubica42

    Bubica42 Well-Known Member

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    Just because you have encountered problems with your builder, it doesn't mean everyone who is doing a build will. The builder is a decent guy. I've worked with him in the past. A good, decent bloke who is not super inflating prices. So pls stop making assumptions. I will go with this builder even if I have to finance myself part of the project to the lockup stage.

    Cheers
     
  4. mcarthur

    mcarthur Well-Known Member

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    Lol - you're making a big assumption about "your builder" as though it's only one.
    Not once have I mentioned "super inflating prices", or in fact "inflating prices", or in fact "prices" :)

    I've no skin in your game and there's none off my nose whatever you do.

    I'd love to hear back after the build is complete and builder paid out - I hope it goes well, and I'm always interested in good builders (decent ones, who don't inflate prices, at the very least) since they're pretty rare in my direct experience.
     
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Im with Corey :)

    Mostly builders that operate outside standard HIA numbers will be asked to reign in if they want the work

    ta
    rolf
     
  6. Bubica42

    Bubica42 Well-Known Member

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    Unless you are planning to build/renovate in SE Qld my builder will be of no use to you. And yes, I will definitely keep everyone posted on the progress etc once it will
    Hopefully they will change their minds.... fingers crossed. ... Can I "unlike" you and Corey ??? Just joking. .. Until they say a definite no, there is still hope...
     
  7. Bubica42

    Bubica42 Well-Known Member

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    Hi there guys,

    Just a quick update on the progress of this building loan saga...

    Broker suggested to change the schedule to what the assessor has suggested in the valuation. Builder agreed to it. Submitted it to Homeside and the answer was" it is slightly outside our policy, but we will ask the assessor to see if it falls within industry standards". That was last week on Wednesday. Nothing back from the bank yet, this is my assumption assumption only as I have been unable to get hold of the broker. Question is, if Homeside are dragging it for so long, are there other lenders with a better turn around time as I need to have the footings and slab poured before the storm season ( late November) starts to prevent land erosion and further costs to fill/compact the land again? Is it worth to try another lender or just stick with Homeside now...

    Thank you
     
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  8. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    @Bubica42 it's not HomeSide that are dragging their feet. They've indicated what they want, you need to give it to them.

    Their parameters are based on industry standards, your builder should be able to meet these. Trying to negotiate around the fringes of those standards means that the assessor at HomeSide will need to delegate it to a higher authority.

    To put it in the banks perspective, your broker sends the new documents to the NAB. They pick it up within a day or two (within their service level agreement) and the assessor notes that it's still outside his authority. He contacts the broker who tries to negotiate but it has to be bumped up the chain to someone with more authority.

    It goes to another queue but this guy is quite busy so it take 3 days to get to the top of his stack. Hopefully this person approves it, but perhaps they say no, so you go back to the beginning.

    The thing that really frustrates me as a broker is people don't give us what we ask for, and then they wonder why there's delays.

    I appreciate I'm taking a hard stance here, but this is a fairly simple thing to resolve. It shouldn't be going on this long.
     
  9. Bubica42

    Bubica42 Well-Known Member

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    [QUOTE="Peter_Tersteeg, post: 80378, member:

    The thing that really frustrates me as a broker is people don't give us what we ask for, and then they wonder why there's delays.

    I appreciate I'm taking a hard stance here, but this is a fairly simple thing to resolve. It shouldn't be going on this long.[/QUOTE]


    I suppose in one way I can understand where you are coming from Peter. However, if my finance was that simple, I would have walked into a branch, ask the lending consultant for a building loan and that's it. Wait for the letter of offer etc. But I realized that my financial needs are outside my expertise hence I have sought professional help/ advise via a broker. As for NAB, the assessor they have allocated to do the val on the would be house/ land package has recommended a progress payment schedule outside their prescribed policy due to the fact that he recognised a split level house with a suspended floor requires a tad more funds at the base stage than an ordinary slab on ground does. His recommendations are not exactly what we want, but we could make them work. Hope that the bank's assessors would see sense in all of this and approve soon.

    Cheers
     
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  10. Bubica42

    Bubica42 Well-Known Member

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    Just wanted to ask....

    Anyone seen the new QBCC contracts for building new homes? I came across them online yesterday and their progress payment schedule is different than the HIA' s schedule. Payments seem to be more evenly distributed with 5, 15, 20, 25, 20 and 15 respectively. Wanted to know if I ask builder to do contract on a QBCC proforma, will I stand a better chance with another lender or even with NAB?

    Thank you
     
  11. D.T.

    D.T. Specialist Property Manager Business Member

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    The banks have what we all want (money) so therefore they make the rules. To be frank, either give them what they need or pay cash for your investments unfortunately.

    A good broker knows and preempts all the rules so provides/frames the application accordingly, but it's still up to you to give the broker what he needs. A branch staffer or a poor/medium broker will only be providing things that are asked for in piecemeal which sounds like the mess you're in.
     
  12. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    @Bubica42 you've raised some fair points. If the deal is outside of the box, then I agree the standard rules may not apply and exceptions need to be made. An unusual property design leading to unusual cost schedules is tricky to anticipate. The unfortunately consequence is that this will require more time to get through.

    Yesterday I was talking to the NAB about a refinance, the assessor told me she'd need to apply for an exception because the last 3 months of statements (for the loan being refinanced) are provided as internet banking history, not proper loan statements. I pointed out the irony that the NAB doesn't provide monthly statements for their loans either, only every 6 months so they can't meet their own policy 10 out of 12 months of the year.

    I'm sure your finance will be approved. Sometimes the banks are simply dumb and that's something we unfortunately have to deal with. Giving them the closest to what they ask for is still the easiest way forward.
     
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  13. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    If there is something different or outside the box, just get your broker to run it past the BDM first - if you can jump the hurdles prior to application it makes everything so much smoother when the time comes.
     
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  14. Bubica42

    Bubica42 Well-Known Member

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    Thank you guys.... I will wait patiently a little longer. Just worried that I cannot get a hold of my broker. Perhaps I have driven him insane with my calls/emails.
    Also hope there will be some news soon... good or bad as I can' t wait much longer. Perhaps other lenders would have been a bit more understanding...
     
  15. tobe

    tobe Well-Known Member

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    If the property is split level, suspended floor, the builder should have used 'schedule 2' from the hia contract.
    The valuer should have noted the schedule being appropriate for the build and the assessor should have signed off, or got his supervisor to sign off.

    Somewhere along the line something's happened. Perhaps the builder didn't specify schedule 2. Perhaps the valuer didn't note it, perhaps the assessor isn't experienced enough to know they can sign off on it with an appropriate valuation.
     
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  16. Bubica42

    Bubica42 Well-Known Member

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    The builder has specified schedule 2 of HIA. The valuer has agreed to it with some minor modifications, which we can work around as I have funds of my own as well. However, the bank's assessor came back with a ridiculous 5% deposit, 10% base, 10-12% frame and a massive 27 to 33% at lock up. The remaining being 25% at fixing and 15 % at practical completion. On the other hand, the valuer suggested 5, 15, 20, 25, 25 and 15 which is a more realistic schedule. We can work around this schedule as it differs by 5% only from what was asked originally, we have asked for 20% at base and 20 % at fixing. Not sure exactly where it went wrong.... Anyway, I am hoping that the assessor will have some common sense in the end and agree to what the valuer has suggested.

    The valuation was excellent. Valuer was a good bloke. This was the second valuation he has done on the property. Therefore the LVR asked was 80%.
    I am now freaking out as my property is located into one of the postcodes downgraded by NAB. Same postcode but different suburb. Will this have an impact onto their decision?

    Thank you.
     
    Last edited: 13th Oct, 2015
  17. Speede

    Speede Well-Known Member

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    Deal sounds shifty
     
  18. Bubica42

    Bubica42 Well-Known Member

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    Shifty? Pls elaborate. Not exactly sure how and why it would be. I have a fixed building contract, signed by both parties, licensed builder, all insurances in place. What could be shifty there? The builder has given me a fantastic fixed price contract. He is a builder I have dealt with before. Hard working, honest man. All we want is for the bank to recognize that the 10% base rule does not fit all builds. If it was your typical slab on ground house, than we will have no objection. But a split level, suspended floor house it definitely requires more than 10% at the base stage. Will see how we go.... As for shifty, I am waiting for an explanation....
     
  19. tobe

    tobe Well-Known Member

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    It should be either schedule 1 or schedule 2, there shouldn't be any faffing around 'negotiating'. The assessor should have pushed the valuer harder for confirmation, and or sent it to the assessors supervisor for sign off.

    Trouble is, this isn't something most brokers and assessor come across regularly, even valuers unless their area has a lot of development.
     
  20. Bubica42

    Bubica42 Well-Known Member

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    Not sure why this has happened Tobe.... but the real trouble is that I so not know where I stand. Is the loan going ahead or not. I am trying to contact my broker but he is not returning my emails, calls or messages. For what I know he could have vanished from the face of the earth. So this is the real trouble. Not knowing where you stand. I thought of getting another broker, however, what if the loan is progressing well and by getting another broker involved I may jeopardise the loan? Damn it... I just need to know what is happening... is that too much to ask from a broker? Even a simple text stating "Have not heard from the bank yet" will suffice.

    Sorry for my rant...