Pre Approval at Auction

Freaking out a bit as i'm going to an auction this Saturday with only a pre-approval email from NAB.

I've read a fair bit about how you can lose 10% deposit at auction if finance doesn't go through. For me this will be $100k+ !

I've spoken to my lender (internal at NAB bank) multiple times and he says I can be placing bids with confidence but the risk still seems enormous. How rare is it for pre-approvals to not go through?

And is there any way I can reduce or completely mitigate this risk by negotiating the amount put down if I win?

 

Pretty rare providing it was a credit assessed preapproval, there's no issues with the valuation and the loan amount/LVR remain the same or lower.

In any case - your banker/broker is best placed to advise.

Cheers

Jamie

 

I would show him the property prior to bidding - NAB have a few Sydney areas they won't lend in or have a restricted LVR. On the upside, if it's a recent approval (done after mid-December) the odds are good that if it doesn't fly with NAB someone else will fund it.

If the approval was done prior to December, please don't bid - go speak to a broker ASAP.

 

It's not one of those 47sqm apartments is it?
or a converted basement with 1.8m ceiling height?

 

What is the postcode of the property and what level of overall deposit are you putting in place?

To get better comfort, best to speak to your banker/broker who set up the pre-approval. Definitely let them know about the property you intend on bidding on - just to ensure it fits in under their standard acceptable property guidelines (this was the issue with the 47 sq. apartment news story, as well as shokingly bad communication). It could even be a good idea to have someone else look over your scenario for you to ensure you've got a plan B.

No surprises that NAB pre-approvals don't feel rock solid after the news story last week. Nonetheless, NAB are actually one of the more thorough lenders when it comes to assessing pre-approvals as its pretty much the same assessment process as a full application - subject to the property being purchased being acceptable. Some lenders aren't too good at this and provide auto pre approvals without credit officers actually reviewing the application in full.