All Topics / Finance / Resigning from work after pre-approval is granted!!! Help!

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  • Profile photo of Ossi89Ossi89
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    @ossi89
    Join Date: 2011
    Post Count: 31

    Hi All,

    I really hope someone will be able to assist me with my question.

    I am in the process of buying my second ip using the equity I have built up from my first ip.

    I have just been granted pre-approval and am hoping to buy a property asap. The only issue is that I have also recently resigned from full-time employment. The rent I will receive from the property should cover 90% of the repayments/expenses and my dad is happy to cover any extra expenses associated with the property while I am studying (including loss of rent if property is vacant).

    Essentially my question is: Once the bank has sent me a pre-approval letter and I have found a property and the valuation is all ok, will they still require proof that I am in full time employment or is that all taken care of during the pre-approval stage.?

    If anyone can give me some advice that would be greatly appreciated.

    Thanks.

    Profile photo of JpcashflowJpcashflow
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    @jpcashflow
    Join Date: 2007
    Post Count: 575

    Wny not work part time to cover the difference?

    Jpcashflow | JP Financial Group
    http://www.jpfinancialgroup.com.au
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    Your first port of call in finance :)

    Profile photo of Ossi89Ossi89
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    @ossi89
    Join Date: 2011
    Post Count: 31

    Thanks for the response Johann. Servicing the loan won't be an issue, as my dad is happy to cover this for me. All I am really concerned about is whether the bank is going to ask me to prove that I am still in full-time employment when it comes time to settle on the property.

    I hope to buy in the next 2-3 weeks and will also be resigning on November 10. Obviously I will not be in working when the property settles. Will the bank then revoke the approval, or so long as I was in full-time employment at the time of pre-approval will everything go through as normal?

    I would be really greatful if someone can explain this to me.

    Thanks again!

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
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    Hi,

    Is this a pre-approval only? meaning you have NOT found a place? and the bank has not issued a final unconditional approval??

    The question of will the bank check?- WHO KNOWS …anything is possible. best to avoid problems so i would say hold off on buying till you have full or perm part time employment again…

    There’s a famous case that only happened last year in which CBA declined to release the funds 1 week before settlement ( the guy had a UNCONDTIONAL approval) but of course one of the conditions is ” financial does not change leading up to settlement” – the guy lost his 10%.

    There are some banks that will allow 1 day employment ( so no need to pass probation) as long as it’s perm full time and LVR is under 90%.

    Regards
    Michael

    Mick C | Shape Home Loans
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    Profile photo of Ossi89Ossi89
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    @ossi89
    Join Date: 2011
    Post Count: 31

    Thanks Michael! Is is likely that the bank would find out that I’m no longer in full time employment? In other words, how often do they check the loan applicants financial details between the time of pre-approval and settlement? Also, am I obligated to advise the bank that I am no longer employed. As I said before, servicing the loan is no issue, I simply need to get the loan first.

    Profile photo of Scott No MatesScott No Mates
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    @scott-no-mates
    Join Date: 2005
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    Just provide a copy of a payslip or bank statement showing pay going in. My bank hasn’t asked for a long time, only when I refinance & then they get tax returns.

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
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    Ossi89 wrote:
    Thanks Michael! Is is likely that the bank would find out that I’m no longer in full time employment? In other words, how often do they check the loan applicants financial details between the time of pre-approval and settlement? Also, am I obligated to advise the bank that I am no longer employed. As I said before, servicing the loan is no issue, I simply need to get the loan first.

    Hard to say, no set policy…it’s rare for them to check, but it does happen….; but just a side note if you go through a broker as part of our responsible lending obligation we will have to declare this ” possible change in financial in the next 12 month” …so i always recommend banks that has a policy in which they would accept a 1 day employment change over so the client is clear from day 1 where they stand and lower any potential lost/risk.

    Regards
    Michael

    Mick C | Shape Home Loans
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    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Agree with Michael that your Broker or Banker would have to decline the deal based on this knowledge going forward.

    Had a deal not so long ago where the client resigned and after Formal Approval the lender rang the employer to speak to the client only to be told he was no longer there. I knew nothing about the client's resignation and the Formal approval was withdrawn even though documents had been issued. The client lost their deposit although managed to get out of the Settlement.

    Not wise course of action in my opinion.

    Whilst you maybe keen to move forward it might end up coming at a cost.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
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    Good advice from the guys above.

    Are you moving into another job? If so, is it in the same field and will there be a probationary period?

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Profile photo of kong71286kong71286
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    @kong71286
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    The banks mainly look at two main variables:

    • Loan to Value Ratio (LVR)
    • Your Debt to Income Ratio

    They have pre-approved the loan based on your income from your previous employment

    Whether they would approve the loan now that you may not be making as much income is questionable

    The only way to find out is to disclose this information to the lender

    However, having said this, there is a less chance of the loan going  through if the lender does know about the changes in your circumstances, and they may need someone else like your dad to go guarantor for the loan

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
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    Another important variable is employment history – particularly if the deal falls within LMI territory.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of JpcashflowJpcashflow
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    @jpcashflow
    Join Date: 2007
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    Its all good to get this loab but what happes
    if your dad can bot make any repayments for u?
    All no offense are you realy learning how to scarfice as well
    getting the loan might be easy but the most inportant thing is what are you learnong

    Jpcashflow | JP Financial Group
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    Profile photo of fWordfWord
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    @fword
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    Definitely in agreement here with what's recommended above: do not buy until you have found another job, preferably one with no probationary period (your boss might waive it if it's obvious you're a capable worker within the first month or so) or a short probationary period. And if at that stage you are really in a hurry to buy, ask your boss kindly for a letter to state that there is no probationary period and that you're employed at a permanent full time basis with a certain salary and work hours, a letter which should be printed on company letterhead and duly signed.

    This was how I went about buying just one month after being employed. In my case this was necessary as well because of a combination of factors:

    1. The lower salary from the old job wouldn't qualify for a large enough loan
    2. Timing: the right property appearing at roughly the 'right' time.

    In essence, your circumstances are unique and you have preferences of what constitutes the 'ideal' property as well, so you may feel compelled to buy if one hits the market even though your job is no longer secure. But rather than take a risk here which could turn into a painful sting, it'd be wiser to hold off till the job is secure. Furthermore, even if your dad is happy to help with repayments (as mine is if things go REALLY sour), I think family is just a 'back up'. Make sure you can manage on your own in the first place, even if things go pear shaped, otherwise you're definitely overextending. Of course, this is unless your dad is the one who desperately wants you to buy, then that's a different issue altogether.

    Profile photo of Ossi89Ossi89
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    @ossi89
    Join Date: 2011
    Post Count: 31

    Thanks for the great infomation eveyone. I am very new to all of this so my questions are quite basic.

    The loan is relatively small as I am buying in a large country town, and my dad has agreed to cover any repayments (if the property is vacant) while I am finishing my last year of university. I currently have a pre-approval so just need to find a property and pass the valuation.

    So hypothetically, if I decided to take a risk and not disclose the fact that I am resigning from my job to the bank, how long do I need to wait before the bank can't pull out of the loan. For example, once the property settles I am safe right, regardless of what happens after that?

    Cheers.

    Profile photo of fWordfWord
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    @fword
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    Ossi89 wrote:
    Thanks for the great infomation eveyone. I am very new to all of this so my questions are quite basic.

    The loan is relatively small as I am buying in a large country town, and my dad has agreed to cover any repayments (if the property is vacant) while I am finishing my last year of university. I currently have a pre-approval so just need to find a property and pass the valuation.

    So hypothetically, if I decided to take a risk and not disclose the fact that I am resigning from my job to the bank, how long do I need to wait before the bank can't pull out of the loan. For example, once the property settles I am safe right, regardless of what happens after that?

    Cheers.

    Well done for starting young. I thought most university kids will be spending their savings on fancy clothes, getting a car loan or buying the next iPhone.

    On the topic of LVR, beware that the bank may tolerate a lower LVR on a property in a country town as compared to a property in a large city or larger regional center. This means they may decide to loan you say, 70% of the value of the property instead of 80% which is currently the norm for property in the city (assuming no LMI).

    I would suggest reading the bank documentation carefully. It's a guess that after settlement, the cheques have been exchanged and the bank has disbursed the funds to you, and in that instance you should be safe. I'm just considering the risk of you either losing your deposit if the bank does find out before settlement and refuses to finance your deal, or your dad has to come up with a couple of hundred grand cold hard cash to prevent you from losing the deal.

    Consider firstly: are you dead set on having to buy a property before your next job? If so, why? Is it worth the risk? They say that good deals pop up all the time. Having a little patience could pay off in the longer run, rather than lying awake at night for days on end prior to settlement.

    Profile photo of Mick CMick C
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    @shape
    Join Date: 2010
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    Ossi89 wrote:
    Thanks for the great infomation eveyone. I am very new to all of this so my questions are quite basic.

    The loan is relatively small as I am buying in a large country town, and my dad has agreed to cover any repayments (if the property is vacant) while I am finishing my last year of university. I currently have a pre-approval so just need to find a property and pass the valuation.

    So hypothetically, if I decided to take a risk and not disclose the fact that I am resigning from my job to the bank, how long do I need to wait before the bank can't pull out of the loan. For example, once the property settles I am safe right, regardless of what happens after that?

    Cheers.

    Side note there are many different type of pre-approval and to be honest most of them are not worth the paper they are written on- …MOST DONT DO ANY CHECKS until you find a place…

    For example if you gone with Bankwest; they issue a computer generated pre-approval within 24 hrs- no checks just “calculation” based on the details YOU PROVIDED>

    It’s not untill you find a place to buy + 10% then they wll ring your employer and confirm your employment details etc…

    4/10 ppl with pre-approval do not end up buying a place, so it’s a waste of the banks time doing a full check at times.

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
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    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
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    Yes Michael dont you love the Bank West Pre-approvals.

    We approve your loan conditional upon you submitting a new application and all supporting documentation and we going through it with a fine tooth comb and seeing if there is any reason why we cant decline it.

    Luv those lenders.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of Mick CMick C
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    @shape
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    Qlds007 wrote:
    Yes Michael dont you love the Bank West Pre-approvals.

    We approve your loan conditional upon you submitting a new application and all supporting documentation and we going through it with a fine tooth comb and seeing if there is any reason why we cant decline it.

    Luv those lenders.

    Cheers

    Yours in Finance

    God bless them,…they sure make our job more interesting :)

    Regards
    Michael

    Mick C | Shape Home Loans
    http://www.shapehomeloans.com.au/
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    Same Banks. Better Rates. Served With a Passion.

    Profile photo of Jamie MooreJamie Moore
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    @jamie-m
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    Shape wrote:
    Qlds007 wrote:
    Yes Michael dont you love the Bank West Pre-approvals.

    We approve your loan conditional upon you submitting a new application and all supporting documentation and we going through it with a fine tooth comb and seeing if there is any reason why we cant decline it.

    Luv those lenders.

    Cheers

    Yours in Finance

    God bless them,…they sure make our job more interesting :) Regards Michael

    Possibly the most painful lender to deal with IMO. Bankwest = premature greying of the hairs.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
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    Really Jamie i could probably add another 19 lender to that list at the mo.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

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