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Pre approval with two lenders at the same time

Discussion in 'Property Finance' started by ellejay, 16th Feb, 2016.

  1. ellejay

    ellejay Well-Known Member

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    A guy at work has had issues with finance in the past so has approached a couple of lenders at the same time to seek pre approval. He's not confident of finance so is trying two lenders to see if either can help him. I guess this happens a lot, but what happens if they both approve him? Would having had checks with the lender that checks first affect his credit rating when the second one looks at his finance? Can he get pre approval with both and then choose the one that offers the best deal? Just curious how it would work out, and if it could be detrimental as I've considered approaching lenders directly myself (not currently as I've found a great broker). Trying to understand the pitfalls though.
     
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  2. Hodor

    Hodor Well-Known Member

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    Yes having multiple checks will have a negative impact on his credit file.

    Preapprovals don't really count for that much anyway, they are indicative only and subject to the security and your circumstances not changing. The lender has zero obligation to lend the cash on a preapproval.

    Get a broker. Save headaches and your credit file.
     
  3. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker

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    It really depends on the situation.

    He may be a neurosurgeon, 80% LVR and he has had just these 2 enquiries = no issues at all.

    Alternatively, he may be a Mine Clearer, 95% LVR and has done 12 credit enquiries over the past 6 months (with no properties) = Major issues.
     
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  4. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Generally speaking - two credit hits shouldn't cause issues. They will need to explain the other credit hit to whichever bank they go with.

    Having said that - it's best to apply once! Multiple enquiries cause more harm than good.

    Jamie
     
  5. Redom

    Redom Mortgage Broker Business Member

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    Hedging your bets isn't really the way to go with lending, you potentially do yourself more harm than good - armed with knowledge and information, they should have a very good/strong idea where they stand with the lender before submitting the deal.
     
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  6. S.T

    S.T Well-Known Member

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    Wouldn't he just purchase subject to finance?
     
  7. ellejay

    ellejay Well-Known Member

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    He said because he'd had issues with finance he said that he wanted to be more certain he could borrow before going through the drama of looking for properties, putting in offers etc when there was a reasonable chance it might fall through.
     
  8. ellejay

    ellejay Well-Known Member

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    Thanks guys, I was just really curious about how it would go, but sounds like it might not really be a big deal depending on his circumstances.
     
  9. albanga

    albanga Well-Known Member

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    @Shahin_Afarin
    Haha mine cleaner. Reckon the banks would still take the risk. Someone in that profession is surely on 500k plus.