The property was scheduled for auction on Saturday, 29 May 2021. On Friday, 14 May 2021 the real estate agent informed the auction was brought forward to 22 May 2021. On Monday morning, 17 May 2021 agent called for best bids in ‘sealed jars’, because the vendor decided to sell, sell, sell right now, and to be in the running, offers lodged will had to be without a cooling off period. Usual tactics. Boring!
At the time we were working in putting together the loan application and completing compliance. One of the applicants was also interstate.
But we did what we had to do. Identify and manage risks so our clients could make informed decisions, with the end result being our in-house loan affordability and cashflow stress assessments were, again, London to a brick on.
Couple of hours later the property was purchased (high $2m) and contracts were exchanged on 18 May 2021 on a 6-week settlement.
Loan (high $1m) was lodged a few days later, approved on 21 June 2021, and settled on time on 29 June 2021. Thank you, Gateway Bank.
The moral of the post is that most property buyers will not buy the first or eleventh or even the twenty-ninth property they will take a keen interest in. No wonder lenders whinge that only a tiny winy percentage of all pre-approvals lodged actually settle within 6 months of been pre-approved.
Therefore, as usual, best to time loan lodgements to coincide with high probability of auction success or negotiations, but always be prepared to address obstacles. We do both well.
Pre-Approval is also known as a conditional approval, indicative approval, approval in principal or home seeker, or by any other fancy name a lender would like to use in their marketing campaigns.
To get a reliable pre-approval a full and complete application with supporting documents needs to be submitted to the lender, and most importantly be assessed by the lender’s credit department and a credit assessment decision be made and in writing.
Anything less is just a sales tool used by lenders (and of course mortgage brokers) to get you to apply for a home loan pre-approval with them so they can take you out of the market. Such pre-approvals are effectively worthless.