The loan suddenly turned into an impossible commercial loan burdened with a +100% LVR.
A few challenging weeks later, (the substantial $amount) loan was approved with a Loan to Valuation ratio over 100%, and the purchase settled exactly on the settlement date.
The culprit – the valuation. It came in short, way, way short, which is common these days. In fact, it came exactly on the 5th out of approximate 156 bids lodged by the 11-odd bidders at auction. It was also at the lower end of the auction guide price range.
The comments within the valuation were also delightfully amusing as well as the usual fine print, viz, the valuation is current at the date of valuation only and may change significantly immediately thereafter. We did not bother challenging the valuation.
The valuation on the other property offered as security came in exactly as expected but it came with a refinancing loan.
Representing the interest of the borrowers and sponsors and arguing the merit of the loan structure and the real value of the property compared to the valuation with the lender paid off.
I could not have done it without the effort afforded by my broker relationship manager and banker assigned to the loan. Thank you, L* and D* at Commonwealth Bank.
Q.E.D. Quod Erat Demonstrandum