As recently as a couple of years ago, a Pre-Approval took an hour with the Bank Manager. A few questions, a few calculations, and shopping we could go.
That was before the Royal Commission, and constant tightening that has occurred under Responsible Lending laws. With the announcement of a relaxation of those laws due to come into effect around March next year, many have breathed a sigh of relief that the good old days may be on their way back.
Unfortunately that’s unlikely, as the Responsible Lending laws have been identified as a duplication of other regulatory controls. Whilst hopefully the “loosening” will lessen burdensome assessment timeframes that can be as long as 6 weeks currently, lenders still have rigorous rules, processes and investigative means to ensure loan affordability.
It’s the assessment timeframes that are currently causing the most angst for would-be buyers. Despite any confidence in a positive outcome, waiting 2-3 weeks after contract signing for an approval creates sleepless nights for all parties involved as finance clauses loom.
And the Surf Coast market is as hot as its been in some years. There’s very little stock, a shortage of rentals, and a herd of would-be Melbourne buyers waiting for the gates to open.
If ever there was a time to be ready with a Pre-Approval, now is it. The fact that vendors are accepting of extended finance clauses is a tribute to the education that agents provide their vendors. But an unconditional offer is like presenting a golden egg to a vendor. It will trump any conditional offer.
A true Pre-Approval for a loan is a fully assessed application, pending a suitable property purchase. Regardless of previous history with a lender and size of deposit, any new lending will require a full credit assessment before there’s confidence that the bank will come to the party come settlement day. Don’t be fooled by anything less than a full assessment. Too many variables once under the assessor’s microscope can bring it all undone.
Here’s our simple Checklist for being prepared:
· Current Photo ID with correct details (including addresses) ready to go
· Year to Date Income on latest Payslips PLUS 2020 Income Statements, OR last 2 years full Business Financials and Tax Returns, showing consistency of income, or
· Clear Loan Statements for all liabilities including business related
· Clear Bank Statements verifying deposit, as well as Income and Expenses
Being prepared enables “best of breed” lender selection. Best of breed right now includes amazing rates, and fast turnaround times. Anything less is a compromise, and a tougher pathway to “unconditional approval”.
For more tips & advice, contact Lanie Conquest or Nicola Tucker at Surf Coast Finance
With over 40 years combined banking & financial services experience, they help local families & businesses make smart financing decisions.
Ph: 03 5264 7702