Process for buying first home

Discussion in 'The Buying & Selling Process' started by AbleTasMan, 22nd Feb, 2020.

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  1. significance

    significance Well-Known Member

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    Yes, that could happen. So if you have an emotional attachment to the property or if it is unique and you and you feel that you must have it, it might not be the best strategy. However, if there are plenty of other properties on the market that you'd also be happy with and it's just a matter of finding one at the right price, you have nothing to lose.
     
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    Or just engage the services of a good broker instead of wasting your time going from bank to bank.
    Most people fail to realise that the lenders DO complete a credit check on you while you're there asking them to provide you with a rate quote, and it DOES affect your credit file as it's logged as an credit inquiry.

    Rubbish - if a valuation comes in comes in lower it affects your LVR and the lender will most certainly tell you. They need your permission to proceed due to the fact that you will be required to put more money in from your own savings and or have LMI applied to your loan.
     
  3. significance

    significance Well-Known Member

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    Rubbish, at least in my recent experience. I contacted several banks and got their best offers before I took out a new mortgage late last year. I also contacted a broker, who was not able to get me as good a deal. The banks asked about my financial circumstances and said their offers would be subject to checks, but they did not run credit checks. I have checked my credit reports online and there is no record of any such queries.

    It would make no sense for banks to run credit checks before you actually apply for pre-approval. It costs them time and money to do so.

    If it comes in sufficiently low to affect your LVR, then of course that will affect things. In the post that you are responding to, I said "if you have a big deposit", they might not care and might not tell you. If you have a big deposit relative to the size of the loan, you will still be well under the LVR that would trigger a need for LMI or additional savings.
     
  4. Lindsay_W

    Lindsay_W Well-Known Member

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    It costs them bugger all and minimal time, they do it all the time.

    Any reduction in value affects the LVR and the amount required for deposit - they don't just proceed and hope you don't notice, they need the applicant to give the go ahead to proceed.
    What you've suggested is absolutely not how it happens when a valuation comes in lower than the contract price, regardless of how much savings you have.
     
    Last edited: 25th Feb, 2020
  5. Trainee

    Trainee Well-Known Member

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    Say you buy a property for 1m. You apply for a 600k loan, with a 450k deposit.

    val comes in at 900k. Would the bank tell you the val? Or just send you an offer for 600k?
     
  6. Lindsay_W

    Lindsay_W Well-Known Member

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    They would tell you, the offer would have the security value on it even if they didn't.
     
  7. significance

    significance Well-Known Member

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    And yet in practice, they don't. None of my queries showed up as credit checks on my credit reports.

    I didn't say "savings". I said "deposit". If you have a large deposit relative to the value of the loan and the value of the property is appropriate to the amount of the loan, then you don't need LMI.
    Example: You have a deposit of $500k. You make an offer of $600k on a house and ask for a $100k loan. The bank's valuation comes in at $550k. It's lower than your offer, but still much higher than the value of the loan. No need for LMI.
     
  8. Lindsay_W

    Lindsay_W Well-Known Member

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    My previous comment was regardless of LMI
    You're arguing about something you've not experienced yourself yet I have seen it happen multiple times, you're free to believe what you want to believe, regardless if it's true or not, as we all are.
    Just think about the scenario you mentioned, would you be happy paying $600K for something worth $550K and then be OK with the fact that you were never told and find out after it settles that your bank has pulled the wool over your eyes? Seriously.
     
    Last edited: 25th Feb, 2020
  9. significance

    significance Well-Known Member

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    No, I wouldn't. However, when I took out a loan recently, the valuer told me that he would not tell me the value as he was hired by and reporting to the bank. The bank did not tell me the value either, only that that the valuer had reported a "moderate risk" and they would be proceeding with the loan. Seriously.
     
  10. Lindsay_W

    Lindsay_W Well-Known Member

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    That's standard, the valuer won't give you a copy of the report the bank had paid for.
    A Moderate 3 risk does not mean a reduction in value of the security property.
    The loan offer documentation (after the loan is approved) would have had the value of the security on it.
     
  11. The Y-man

    The Y-man Moderator Staff Member

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    We are verging to being off topic - unless we are already. The views have been made known, up to the OP to take in and discover.

    The Y-man
     
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  12. Lindsay_W

    Lindsay_W Well-Known Member

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    Agreed
     
  13. AbleTasMan

    AbleTasMan Well-Known Member

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    I’ve been doing a lot more reading and online research on this in the last few days. I guess my specific case is very vanilla / typical. Just buying something I can sit in and pay off as fast as possible. Prepared to put most of my pay and savings into it. Not an investor, not looking for any tax loopholes, not looking to rent it out, and not planning on moving from my area.

    With that in mind, what would be the reason of not going with one of these online ones, apart from that they may reject me?

    Tic Toc: 2.79% (no fees, unlimited redraw & extra payments, offset $10 a month)
    Ubank: 2.84% (no fees, unlimited redraw, no offset)
    Athena: 2.84% (no fees, unlimited redraw & extra payments, combined redraw/100% offset)

    Or, is a big 4 bank going to match any of these?

    When comparing different loans, should I be looking at the rate or the comparison rate?
     
  14. AbleTasMan

    AbleTasMan Well-Known Member

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    Now it makes sense!! I was clearly getting confused on what the pre-approval was. I thought the bank was pre-approving a set amount of money and a specific house. But from what you’ve said they’re just approving that they will give me money (the amount and the house it’s being used to buy will be sorted later).
     
  15. AbleTasMan

    AbleTasMan Well-Known Member

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    I think this is the problem with the current market… there’s no supply! In the suburb I’ve mainly been looking at there are currently only three 2-bedroom units on the market. It's been like this for a while. The good thing though with this suburb is that it’s a bit further out from Hobart than others, so I’m hoping not as many people will be looking there.
     
  16. AbleTasMan

    AbleTasMan Well-Known Member

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    If there’s no open home listed for the property but it says “Contact the agent to arrange an appointment” is that what I’m meant to do, just call up the agent and make a time to see it?

    Does this put me at any disadvantage when it comes to negotiating an offer?
     
  17. AbleTasMan

    AbleTasMan Well-Known Member

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    The other thing, if the property is close to a highway, and also on the road to a major shopping centre, is that a good bargaining tool to have, in getting a lower price? Neither of those really bother me much, but I can imagine (without seeing it in person) there would be cars going past at all hours of the day.
     
  18. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Dreamer :)

    with nearly a billion in settled loans over 20 years, I cant recall had a val higher than purchase price in residential purchases that werent favourable sales.

    Conversely, about 1 in 20 vals come in low, and the lender has an ethical and moral obligation to let the buyer know, especially where its new stock and the buyer is not local

    ta
    rolf
     
  19. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    As a general note on this topic

    CCR legislation in the early 2000s was well meant, but in truth means little since we are often comparing oranges to carrots coz they are the same colour.

    Comparison rate is about as useful in REAL cost/benefit analysis of a home loan, as going to Harvey Norman and buying a Win 10 box. There are win 10 boxes that are great for really basic stuff, and then there are others that will do Video editing, decent speed gaming etc. The issue with Loans is that people dont know they can benefit from a gaming machine, and a few mths later get ****** with the salesperson coz the slow and small RAM, chicken legs processor, no external graphics, and 128 SSD isnt fit for the "NEW" use, and everything is hard soldered with no upgrade options.

    But it was cheap.........................and the salesperson just wanted to make a bigger com by selling a higher spec machine :)


    Larger lenders such as APRA regulated lenders have " small benefits" such as protection of YOUR money to 250 k, whereas non APRA lenders do not.

    If one understands what this means in real life, then thats fine

    Many lower cost lenders also dont have discrete offsets, only redraw ( eg U bank) which may become problematic if one makes the OO property into an IP in a few years time and have paid off a bunch of the original loan, or heaven forbid done salary crediting to the loan - thats your worst nightmare dressed as a daydream :)

    Loans aint loans

    ta
    rolf
     
  20. The Y-man

    The Y-man Moderator Staff Member

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    Not sure if still common but at one time everyone was offering new customers low rates, and once you are locked in they would ramp up the rates and also have big exit fees so you couldn't go anywhere else.

    The Y-man
     
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