When you set out to buy a property, no doubt, one of the first steps you will take is choosing your conveyancer. A professional conveyancer will help you with the settlement and title transfer process by ensuring you are meeting all of your legal obligations and that your rights are protected during the transaction.
One of the concerns for many conveyancers is, has your finance been approved, prior to allowing you to sign a purchase contract.
Unfortunately, many unsuspecting buyers, will sign a sales contract without having a conditional approval in place. They falsely believe that a pre approval is sufficient evidence that their home loan will be approved. However, this false confidence can have devastating consequences, if your finance falls through.
What many consumers don’t realise, is that with a pre approval, your loan may not have been assessed at all, prior to issuing you with this “certificate”. This is particularly true for application processed by the consumer via the internet, without speaking to a real person. Though it can also occur when dealing directly with the bank or even with a less than diligent broker.
At Bee Finance Savvy, we insist upon full assessments of all loan applications, prior to allowing our customers to sign a sales contract or to attend an auction. If mortgage insurance is involved, this becomes even more important. As unfortunately, many banks will issue an approval without your file even going to the mortgage insurer. Mortgage insurers are much more strict than the banks, and can easily decline your loan, even after the bank has approved it.
Another scenario that consumers may make an error in, is in calculating exactly how much they need to complete their purchase. Sure you know how much you need for your deposit and stamp duty, but have you been informed as to whether you will need to pay for all or part of your mortgage insurance from your own pocket?
Additionally, those whom need to refinance their existing property to obtain their deposit, before being in a position to complete their purchase, can be leaving themselves in a risky position, if they have not already had their refinance fully approved AND their new purchase loan fully assessed.
The bank must ensure that you meet their criteria in affording both your current loan, with its new increased amount owing, as well as your desired purchase. Failure to correctly assess both of these factors, can leave consumers short of cash, which is devastating if you have signed a purchase contact without arranging your loan approval.
It’s true that most purchases in Australia come with a 5-10 day cooling off period. However there are still fees involved if you do not go ahead with the purchase. Wouldn’t you rather put this money towards furniture for your new home, rather than in the vendor’s pocket?
To ensure that you are fully prepared for your next purchase, contact us at Bee Finance Savvy on 1300 140 554, or email us at firstname.lastname@example.org for a no obligation assessment of your financial situation.
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