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Finance not approved for unit in Redcliffe

Discussion in 'Property Finance' started by n_t_r, 16th Oct, 2015.

  1. n_t_r

    n_t_r Member

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    just thought I'd share.... I was pre approved through Adelaide bank for 90% lvr loan up to property value of $250k

    Found an older 2 bed unit in Redcliffe for $230k. (Jeffrey st). Valuer went on site and from what I understand gave a positive appraisal. Finance was rejected by Adelaide bank as they say lmi was not approved due to possible flood issues (could be valid) and insufficient comparable sales.

    Does that sound "normal"? Rpdata shows recent sales validating my offer and I know for a fact another unit around the corner almost identical sold for more ( I was an active bidder at The auction).

    Maybe banks getting more selective on 90% loans? Maybe lmi was truly rejected. Anyone had similar experiences lately???
     
    Last edited: 16th Oct, 2015
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    That's the risk with using a lender that doesn't have in-house LMI. The lender may be fine with it, but if the insurer has an issue the deal's off.

    You might have better luck with a different lender - or, you might have dodged a bullet regarding the flood issue.
     
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  3. Redom

    Redom Mortgage Broker Business Member

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    Hmm strange one - the insurer can definitely decide to reject on the basis of valuer concerns. You should try and get your hands on a copy of the valuation and see exactly what the issue is.

    Insufficient comparables can't be the reason - not in Redcliffe. They'd just widen the window of comparable sales and the area's hardly remote.

    If the lenders willing to fund it but the insurers not, than you may have better luck with a lender that'll agree to the deal without needing the insurers approval - as Jess as alluded to.

    I had a recent deal where the insurer (not the lender) was worried about build and pest - which was quite unusual and indicated a greater risk tolerance. After some notes and back and forth with the valuer, it was all cleared up and went through fine.

    Other potential strategies - may be able to get a COS of valuation at an 80% lend from either ANZ or CBA if their live options for you.
     
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  4. n_t_r

    n_t_r Member

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    Thanks Redom and Jess. I tend to take it as a sign- I was sooooo diligent checking flood reports whilst looking for property in Gailes, it honestly skipped my mind to check.

    Redom - is COS completion of sale?
     
  5. D.T.

    D.T. Adelaide Property Manager Business Member

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    Contract of Sale, meaning the valuer looks at the contract rather than the property. This is handy when you don't want the bank to see what you're buying. Max of 80% in most cases I think.
     
  6. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    There is actually no valuer involved - the assessor just checks off the valuation based on the contract figure. Mostly 80%, however there are options to go into LMI to 90% based on certain scenarios.
     
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  7. D.T.

    D.T. Adelaide Property Manager Business Member

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    Thanks Corey you're very helpful.

    How do the LMI companies like it? Or is it mostly DUA places?
     
  8. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    DUA all the way - Genworth/QBE wouldn't touch it directly.
     
  9. tomlemke

    tomlemke Well-Known Member

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    I had one of my places re valued by a new bank to try and do an equity realease bank came back saying that it was in a flood zone (whole of newcastle is flood zone) and they would only go to 80% lend. Approached the next bank finance was approved straight away
     
  10. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    OP - see if your broker can get it done via ANZ or STG using a CoS.

    ANZ will only work if all parties are in the same state (buyer, broker, property). STG say they'll do 90% based on a contract of sale - but in reality, they may request a full val.

    Cheers

    Jamie