Make offer higher than pre-approved purchase price?

Hi all,

Hypothetical scenario...

Let's say I have a pre-approval for $1M purchase price and then I make an offer which is accepted at $1,030,000.

If I manage to pull together the $30K difference (e.g. continued savings while looking / family gift / dividend from my Pty Ltd) would lenders be OK with this sort of thing?

I'm assuming the lender would come to the table to get me to the $1M as long as I can fund the $30K shortfall, but I have no idea...

Thanks for any help in advance.

 

What if the lender values the property at 900k?

 

My lender okayed ongoing weekly savings into my savings account with proof that it's coming from my usual income. But you need signed letters that it's a gift from someone else & I guess they just need a paper/electronic trail to prove that it hasn't come out of nowhere.

 

Good point.

OK, assuming I'm in cooling off and the lender values it at $1,030,000.

 

Preapproval for 1m at what LVR? Can you increase the LVR, for example?

This should be a conversation with your mortgage broker.

 

90% Base LVR + LMI. No option to go any higher with current lender.

My first guess was that this sort of thing would be common (people overcooking bids at auction comes to mind) and they need to find the remaining funds to complete from somewhere.

Haven't been able to reach my broker today so thought I'd quickly post to sense-check this.

I'm in a position where there seems to be quite a few properties going for the $1M to $1,050,000 range that are the kind we're looking for which prompted the thought.

Thanks.

 

Your pre-approval relates to the loan amount not the purchase price,
So if you go $30K over your budget regarding the purchase price you will still be able to get the loan amount you're pre-approved for however you will need to come up with the $30K shortfall from somewhere else. Your LVR and LMI would be reduced in this scenario, assuming the property valuation is all OK.

 

Lender would ask you to show evidence of funds to complete. Some lenders ask you to provide stat dec if it is a gift. Cash gift may only be accepted from sibling/parent. Gifts of large cash amount from friends may not be accepted. It is best to have a word with your broker/lender and have a plan ready.

 

Wise to understand what is approved. Eg is it 80% of 1m? In which case you will need 30k plus 20% x 1m....plus duty on 1.03m etc....