Urgent help needed, loan not formally approved, settlement is in 1.5 weeks

Hi everyone,

I'm in a quite a difficult situation now, hoping to get some advice from you.

I have signed a contract and paid 10% deposit. I got pre-approval for my loan before I signed the contract. My settlement is in 1.5 weeks and I still have got unconditional approval or any loan document to sign yet.
I'm with a broker and I have chased the broker. The reason for the delay is that the bank keeps asking for more outstanding documents (at different times, not altogether so it just dragged on).
This is with one of the major banks. It's an investment loan, so things get harder.

I have also pre-approval from a non-bank lender with another broker. I'm thinking of contacting this broker and go through the full application process with this non-bank lender.

As a loan with a bank lender has better rate and is better for my debt portfolio. So, do you think it's ok for me to ask to other broker to process my formal application with the non-bank lender now as a backup plan. But I will still go with the bank lender if I can get their approval in time.

My questions are:
- Can we put formal loan applications for the same property at the same time? does it affect my existing application?
- Usually, would the other broker be happy for me to switch back to the bank lender loan if I get approval from them?

I will need to ask for a delay in settlement as well.

Thanks all for your advice.

 

1.5 weeks is ages. I've had deals settle less than a week after contract was signed.

Idea: Trust your broker. It's not your job to get your finance approved.

 

I can definitely see your point.

I disagree with Steven - 1.5 weeks is not ages, especially if anything goes wrong with doc signing or similar, there's not much room to move. It's not impossible by any stretch but it's not ages.

Other than irritating your current broker, there's no harm in doing a dual application if it's really not looking like getting done in time.

I would offer to pay the broker that does the non-successful deal for you one way or another, that way you cover their costs and keep the relationship friendly.

 

Get your bases covered, I'd check with the other broker and see if they can get approval faster. I had a good friend go through something similar, lots of failed promises, non returning calls from the broker, in the end they just went and got another loan with someone else as they could deliver on the time frame. I do feel for brokers, but they need to get better escalation paths with banks to get things processed faster as they're at the mercy of losing customers or just not put loans with banks they know are slow right now.

 

In answer to your questions
1. yes
2. no - they would be doing work and not getting paid.

What state is the property in? If NSW you would generally have another 2 weeks until you lose the deposit. In QLD you must settle on the agreed date.

What lender?

 

The property is in Victoria, do you know how many weeks do you have more after settlement before we lose the deposit? I am still waiting for a phone call from my solicitor.

It's with WBC.

 

Thanks Jess, it sounds like a good idea to offer to pay the broker that does the non-successful deal, how much would you think reasonable?

 

yes, I wanted to check with the other broker but not sure how I approach it. Should I ask him now or should I wait for a couple of more days to hear any good news from the current broker.

 

Also, any advice on how to ask for 1-2 weeks more for settlement with the vendor? how should I phrase my situation so they are more likely to accept?

thanks

 

That sounds reassuring, but I am still very anxious

 

I'd negotiate this with them, but not less than $500. Check your quote too, you may find you're up for fees if a loan gets approved but you don't proceed.

 

thanks Jess.

 

Tell them you're preapproved and the loan is a WIP but bank's processing team is busy due to the recent APRA changes. As long as they think you'll get the loan approved, it won't take forever and they can't get more for the property, they're unlikely to decline the request for an extension.

 

Thanks Lacrim. That sounds good, and it's true, it was mainly because of the APRA changes. I hope they will accept it.

 

I'm not au fait with laws in Victoria but did you have a subject to finance clause you can call upon? Or will you lose your deposit if you can't proceed? In QLD and WA, its pretty simple to bug out without incurring anything if you have a finance clause.

 

Yeah I had this problem with my first purchase. I am overseas though.

From now on I ask for a longer settlement period (2 months for current one). It's just not worth the stress when the bank drags their feet and lose your fking documents while you crap your pants worrying about your 50 grand, and end up paying a grand or two in interest on money paid a week late beyond settlement with another week until the notice of termination period is up.

 

Seems it getting difficult to get loans, as my lawyer told me many offers failed due to failed loan application (in NSW)

 

Most likely the loan with Westpac is going to be approved and settle on time. The reality is it's the busiest time of the year for the banks (EOFY), they're not dragging their feet, they're just working to get through an enormous volume of applications as quickly as they can.

The constant requests for more information isn't unique either, but it is incredibly frustrating. We're seeing it too. Credit and quality control departments at the banks are requesting more information that you won't find on any check lists. The worst part is they don't seem to ask for it all upfront, instead they're drip feeding the requests.

If your loan was going to be outright declined, the broker would have known and expected this outcome already. It is a lot harder to get some loans approved at the moment but they are still getting approved. Once the loan is approved, Westpac can get everything else done within 3 days and settle if necessary.

 

@Peter_Tersteeg I'm finding this too. Items being requested that aren't on the checklists. I have a few going through now. Westpac had a 10 day turnaround when we lodged last week. But not unexpected this time of the year as we approach end of financial year.

 

I think that ASIC study where they found all the problems with I/O loan applications has come back to bite. Someone, probably ASIC or possibly APRA has given the banks a nudge to say "hey, tighten up your processes".

Or possibly they're aware of the the change in the wind - if a RC is on the way they want to have at least some applications they can pull out to show they were doing proper checks.