Unconditional Loans with Multiple Banks

Discussion in 'Loans & Mortgage Brokers' started by Peerdon, 24th Mar, 2020.

Join Australia's most dynamic and respected property investment community
  1. Peerdon

    Peerdon Member

    Joined:
    22nd Jan, 2020
    Posts:
    10
    Location:
    Mount Waverley
    Given the current health crisis with the cornavirus and the economic impacts of this, would it be prudent and ok to ask multiple banks for unconditional approval?

    Our current situation is that we have bought an investment property 2 months ago, with settlement in June this year (5 month settlement). We had pre-approval with a major bank but they advised that they couldn't go unconditional as it needed to be within the 3 month period to settlement. There are 3 months until settlement as of today.

    My wife has a safe job in the health/medical sector, however I am self employed (sole trader) and my business has taken a big hit due to the coronavirus issues worldwide. It will be fine long term as I have no debt and no employees, but short term (who knows how long) it will suffer. To get pre approval it was ok to just rely on my previous year's tax return (Jul 18 to Jun 19) and the most recent payslips from my wife. I don't know if this will change for unconditional approval, especially given the economic impact the cornavirus has had.

    Also, has anyone heard of or experienced a bank recall on an unconditionally approved loan? I heard instances of this may have happened during the GFC?

    If anyone could provide some input on what we could do, I'd be very appreciative.

    Thank you and stay safe.
     
  2. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,319
    Location:
    Here.
    Applying to multiple banks will impact your credit report very quickly. You might find that lenders will become more reluctant to touch you.

    At this point mainstream lenders haven't started changing how they approve loans and you're only 3 months away from settlement. See a broker now, figure out the most appropriate lender to your circumstances and get the loan approved.
     
    Peerdon likes this.
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
    9th Jun, 2006
    Posts:
    30,804
    Location:
    Australia wide
    Yes I have seen banks reneg on unconditionals.

    The issue with being self employed is that any downturn will not show up in financials until after the financial year so you will probably be ok.
     
  4. Peerdon

    Peerdon Member

    Joined:
    22nd Jan, 2020
    Posts:
    10
    Location:
    Mount Waverley
    Thanks Terry, regarding the reneging of loans, who did this mostly happen to and what were the reasons why? Did you see it happen to anyone who provided a 20% deposit?

    Thank you!
     
  5. Peerdon

    Peerdon Member

    Joined:
    22nd Jan, 2020
    Posts:
    10
    Location:
    Mount Waverley
    Thanks Peter, we're looking to get an unconditional approval asap so for now we'll go direct with the bank that gave us the pre-approval!
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
    9th Jun, 2006
    Posts:
    30,804
    Location:
    Australia wide
    last year when at settlement the bank worked out that they made an error. 20% deposit provided.
    Eventually got them to reapprove and settle but they refused initially
     
  7. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,319
    Location:
    Here.
    I've seen someone have their loan approval rescinded at the last minute on a 60% loan. Fraud was involved. It was actually a banker that committed the fraud, she lost her job. The borrower didn't get the refinance she wanted.
     
  8. Peerdon

    Peerdon Member

    Joined:
    22nd Jan, 2020
    Posts:
    10
    Location:
    Mount Waverley
    Oh wow...lucky it was just a refinance!
     
    Terry_w likes this.
  9. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    15th Aug, 2005
    Posts:
    7,515
    Location:
    Gold Coast
    if u stick with a Tier 1 bank, mostlly once the loan docs are certified you have 90 to 180 days to settle.

    Some non banks demand 90 days from full val to settlement, and with the current valuer sentiment, that may cause issues.

    ta
    rolf
     
  10. Marty McDonald

    Marty McDonald Mortgage broker Business Member

    Joined:
    22nd Jun, 2015
    Posts:
    691
    Location:
    Sydney North Shore and Norther beaches
    Macquarie is now asking for proof of up to date cash flow for both PAYG and self employed borrowers ie they want to see more than old tax returns and 6 week / 2 month old payslips. They are asking for bank statements to confirm income deposits no older than 14 days before formal approval. Others will likely follow.