What can go wrong between unconditional approval and settlement day

Settlement is next week, loan was unconditionally approved by BIG4 subsidiary bank last month(no LMI). They are talking to my conveyancer and everything seems to be on track.

however I will using a new personal loan I took out after this unconditional approval from another non-bank lender to pay for stamp duty on settlement day. This PL amount was deposited in my another (third) bank account and I will be moving it in chunks via other accounts to the home loan bank’s transaction account before settlement day. PL repayments will start 2 weeks after settlement date and credit report shows no mention of this PL account yet (though enquiry is there).

What are the chances this BIG4 subsidiary bank will run a credit check on or before settlement day?

If they do find out and ask me to remediate, will they be ok with me closing out car lease( similar monthly payment for finance part but much lower amount outstanding than PL) or I will have to close out PL itself and arrange stamp duty funds from somewhere else?

 

very low

they might want to reassess the deal to make sure it can service. I have seen this only once in my 20 years when the bank discovered they had approved a loan by mistake.

 

You'll be fine

 

They'll only reassess if you give them a reason to reassess.

 

Thank you all. This is very reassuring .

@Rolf Latham - they just asked for a signed letter from me to confirm I will be getting gift from family for shortfall. Once provided they were happy with it.

@Peter_Tersteeg - What could be that reason? Settlement delay? I have no relationship with this BIG4 subsidiary bank other than this home loan approval so they can not know if I were to be fired or take up more debt unless they ask for payslips/run credit check.

 

I had a case where a lender did a random employment check a week prior to settlement. The client had since resigned from their job. The lender still honored the approval, but it was close.

Say you went into a branch to set up your offset account and casually mentioned some change in your circumstances, that might set of an alarm bell which triggers further investigation. The approval letter and even the loan contract is not an absolute guarantee that they'll fund the loan if something changes prior to settlement.

 

Would this be considered lying on your application?

 

@The Y-man - Not changed but realised after unconditional approval that from peace of mind POV I am better off taking out a small personal loan than taking up family’s offer of gift.

@Trainee - it was an actual offer of gift.

@Peter_Tersteeg I am careful vis-a-vis mentioning anything out of order in my conversation with bank people and sort of covered from employment perspective as not resigning/being fired at least till next week

Let me know what else to be careful about.

 

but did you tell the bank this?

 

Of course not. Hence asked here.

 

You are required to disclose any and all changes of circumstances that may affect the ability to repay the debt. Technically the PL needs to be put in the serviceability calculator to make sure there is still a positive surplus or it will violate responsible lending laws.

 

So you trying to get a financial advantage by deception?

 

Big risk ....If they do reassess and stop settlement its going to cost you and contract default may occur. Pretty foolish to be honest.

 

Bit harsh isn’t it?

Thought they might take at least a week to reassess so had asked my conveyancer to bring settlement forward by 2 week from contracted date.

My understanding is if settlement were to be delayed I am only paying couple of hundred dollars for both set of conveyancers rescheduling fee and saving same in interest costs as long as settlement does occur on or before contracted date.

can always ask family for promised gift and close this PL immediately if that’s what lender wants or I might just have enough surplus left

 

Sailed through unperturbed

In the end fully drawn non bank PL account didn’t show up on any credit report till last day.

Statutory Warning - Do not do this as not only this is wrong, this may just cost you your whole deposit at max and default interest at least if bank were to run a credit check.