Hi All,
I have a friend who has applied for a home loan (pre-approval), however she has purposely failed to mention to the bank that she has a car loan (with a finance company such as Esanda or something) as she believes if she disclosed this she wont get anywhere near what she wants to borrow if she mentions a $30,000 car loan.
I have tried to tell her that being upfront with the bank is the best policy as the bank is actually looking at her current debts and working out a worst case scenario (i.e. if rates rise etc) of what she can afford, and they are doing this for both her and their benefit. She claims all they look at is your credit rating which will not show her car loan.
My question is: currently she is only going for pre-approval. How deep will the bank look when she actually wants to get a hold of the loan? I really want to talk her into being honest and upfront with the bank, hopefully you guys can bring up a few points to help me convince her!
Thanks!Hi ShowBiz,
As a small time property investor, my understanding of gaining Pre Approval is not hard to acquire. When it comes to actually borrowing the money the bank will normally cheek your credit report. This report will state who has previously cheeked your report and for what reason (ie. It will state the cba inquired prior to giving a 30k loan for a car in 2006). It seems currently every man and his dog will hand out pre approval letters. Hope this helps.
Committing fraud will count against her more…
Hi Showbiz,
As Simon indicates she would be committing mortgage fraud if she failed to disclose her car loan. Something she would be well advised to avoid. Furthermore, the bank would detect the loan on her credit report anyway and she may get in a whole lot of trouble (not getting a loan would be the least she had to worry about).
Regards,
Cameron Perry
Director
Perry Financial Strategies
Level 13, 30 Collins St
Melbourne VIC 3000
Ph (03) 9662 1999
Fax (03) 9662 2044
email: [email protected]Hi ShowBiz,
I have just been through my first loan process from a not very strong financial position (no issue with serviceability, just initial funds/debts). I would suggest that your friend avoids going direct to lenders and finds a good mortgage broker who knows how the system works with all lenders. I found the advice from ours invaluable and they charge no fee to you direct – win-win in my opinion.
Cheers.
Hi ShowBiz,
I agree with the comments that your friend should get some advice from a Mortgage Broker. Most brokers will tell you exactly how much you can borrow in your present circumstances. If your friend does manage to borrow more than she would normally have by non disclosure some of the protection she would normally get by way of the consumer credit code may be voided. Lenders are required by law to check that borrowers are not taking on too much debt.
Having said that, your friend will probably be surprised by the loan she can technically afford after disclosing all her financial commitments. Most borrowers I deal with stay well under the maximum banks will lend because you need some surplus money to live.I would say as a lender that she is not helping her situation at all should there be legal complications and that lender finds out she had a pre-existing car loan. It would not worth the legal bill that could be imposed.
She can obtain serviceability calculators from any lender if she calls up and asks for one. Some lenders may require athem to be a member of there broker network, but this will help with her to ensure she has serviceability.
A very risky situation that sounds like your friend does not want to liste n to what is being said. I hope this helps.
Also when it bounces it will make the other lenders weary so she is not doing herself any favours. If it is the limit she is concerned about a good broker will know ways of possibly increasing this without being fraudulent. The loan structure is a far more constructive way in accessing higher amounts.
I had one of these this week. client failed to mention their car loan, and the lender found it on their credit check. They didn't seem too concerned about it, just asking for the details are proceeding.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi all,
Just reading your posts and comments about the above topic.
There is a lady down the road from where I live and she and her 2 kids went for a home loan.
They are buying the house that they live in (ppor) for $190,000.
The 2 kids work but the mother does not as she is on a disability pension.
One of the kids has got a $38,000 debt which includes 1 credit card and 2 car loans.
They did not tell the bank about any of these loans and still got the home loan !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Just goes to show that some banks will lend to anyone !!!!!!!!!!!!!!!!!
By the way the bank in which they dealt with was RAMS.
Say no more.
Thanks
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