Loan Application and impact on credit record

We are currently working towards a purchase of a PPOR and getting an idea of our borrowing capacity. Before contacting my broker, I want to also speak to a smaller bank that he doesn't deal with, as they have some pretty good deals at present and I'm a current customer with them.

They are wanting me to complete a full application etc and I'm wondering at what stage of the process this will register as a hit on the credit rating as I don't want to hurt our chances if I don't like their offer and end up sticking with the broker and his usual lenders.

 

As soon as the application is submitted you will receive a credit hit on your file, this is the downside with direct to branch with lenders - they will try lock you in from the start of the process, even if this can have negative outcomes for yourself.

 

Thanks @Corey Batt that's just what I needed to know! I had a feeling we were being locked in and sounds like that's exactly what is happening.

 

Which lender is it? If they do deal with brokers one if us might have access to their calc which would avoid the need to submit a loan application.

 

Its a sales technique to lock you in. once an app is submitted it will be unlikely you go elsewhere.

Surely they can check serviceability etc without an app.

 

It's annoying.

You should be able to give them a rundown of your situation and they should be able to provide an idea as to whether you're likely to qualify.

Agree with Terry - requiring a full app is a sales tactic. They're trying to lock you in.

Cheers

Jamie

 

@Jess Peletier it Qudos Bank I am dealing with. Pretty sure I can find better through a broker but thought I'd check what they had to offer.

Thanks to everyone for the advice. I have asked them to check borrowing capacity and likelihood of approval without submitting an application so will see what happens.

 

One credit inquiry on your file isn't a big deal. It's when you have 4 or more in an short space of time that things could start to get tricky.

 

I'm sure I'm not alone by saying Qudos who?

I googled them - and their rates aren't that amazing.

If you're after cheap rates and a decent lender - check out the likes of ING.

Cheers

Jamie

 

Good deals as in cheap rate?

You need to consider their policies in conjunction with you short, medium and longer term goals much more than the rate.

 

I agree @Colin Rice which is why I'll probably end up letting the broker take care of it. It's simply a case of me wanting to know what else is out there.

Qudos are offering 3.83% Variable up to 95% LVR with 100% offset and no fees, which ain't too shabby.

 

I have been a customer for a long time, the name is a recent change & a stupid one IMO, it was the Qantas credit union.

Euro has mentioned them a few times, not sure if after the change that they deal with brokers or not.

 

I had my PPOR with Qantas Credit Union / Qudos Bank.

Had no complaints with them (aside from the ridiculous name change!) and initially planned to use them when I decided to buy an IP. Glad I ended up using a broker and refinancing.

 

Realistically one credit application pre-approval isn't going to tie you to that lender. You can certainly go to a broker afterwards and it won't stop them from finding you a good deal. Most lenders won't turn their back on you because you have one pre-approval on record in the last few months.

Nonetheless, having it there usually does mean a much greater level of conversion for the bank (Qudos) than just a chat with you and providing you numbers.

There can be some value in having an app submitted to - you do get marginally more certainty about borrowing limits, at least with that particular lender. How valuable this is would also depend on the banks process for assessing pre-approvals. Some banks a computer just spits out an auto approval pretty quickly - this doesn't actually tell you much as the banker/broker's interpretation and data inputting may not be how the bank actually will assess it once a contract is put in place.

Simply, a pre-approval from some lenders are worth more than others.

 

Thanks for the detailed info @Redom

 

Why was that ?

I saw good rates and often a free points offer, but only used brokers.

Do you, or anyone know if they now also use brokers ?

 

They used to use brokers. Not sure if they still do. Many credit unions use brokers for a while, get a whole lot of customers and then turn brokers off.

The rates at 95% are pretty good. Westpac beats them, but only with their first option honeymoon rate discounted for the first three years, which I write for a lot of fhbs that need a high lvr and aren't borrowing enough to get s good discount with a small deposit.

 

Curious as to why you choose this approach over something like Suncorp's and St George's 3.98% ongoing at 95%? Do you feel these clients are likely going to be selling/refinancing within 5 years?