Would a loan be rejected if the house has cracks?

Discussion in 'The Buying & Selling Process' started by Toucan, 1st Jan, 2020.

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  1. Toucan

    Toucan Well-Known Member

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    Adelaide
    Hi everyone, I'm wondering if a loan would be rejected if the house has cracks?
    The house in question has a significant crack (6mm) in one room, I've had an engineer go out & quote to fix the issues.
    He said one back corner of the house has only just gone structural & it would need to be rectified in the near future with a few underpins (10k) he said a couple years max to have it done.
    And that the front opposing corner isn't structural but would need underpinning in the next few years also to stop anymore movement (12k)
    He said the stormwater drainage needs to be done as a priority before anything else & needs to be done straight away as that's where these issues are coming from.

    Now I'm pretty sure I could get the property at a very good price & even after all the work is done it would owe me significantly less than other properties in the area, probably around 40k less. And properties are getting snapped up very quickly in the area.

    I'd love to put an offer in as I'd have the money to do the stormwater & underpinning to the rear straight away & could do the front within a year.
    But I'm worried that the loan will be rejected based on the cracks.

    Let me know what you guys think.
     
  2. Terry_w

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

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    A lender will not know about the crack unless it appears on the valuation report. this could only happen if there is a full valuation of the property - many are drive by/kerbside or computer generated these days.

    Even if a valuer attends they may not notice it. If they notice it they may or may not comment.

    if they comment the lender might ask for an engineers report or decline to use the property as security or perhaps just lend on land value.
     
    kierank likes this.
  3. Toucan

    Toucan Well-Known Member

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    Adelaide
    Thanks Terry, so it's a maybe..
    The BOQ ucv is only 10k lower than what I think I could get it for & was last done in 2007, the suburb has had 14% increase in the last 5 years.
    Another question is, would it look bad for me to have a loan application rejected based on the valuation?
     
  4. Terry_w

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

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    usually you can get the val done before the application.
     
  5. See Change

    See Change Well-Known Member

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    Never heard of it happening .

    has anyone else

    cliff
     
  6. Morgs

    Morgs Well-Known Member Business Member

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    If you can get a valuation done up front then you can avoid having an application submitted to find out. Depending on the lender, security, LVR% it may not need a physical inspection and rely on an AVM/Desktop/Kerbside valuation.
     
  7. Terry_w

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

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    I've seen this happen about 4 times in my life as a broker. Where the client still wanted the property we had to change banks - and this was in the old days where you couldn't do a valuation upfront. One client was stuck with the one lender and had to get an expensive engineers report, which they weren't happy paying for, but he had no choice.
     
    See Change likes this.

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