Forums / Property Investing / Help Needed! / FIRST HOME OWNER HELP!!

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  • Profile photo of ARNOLOGYARNOLOGY
    Participant
    @arnology
    Join Date: 2009
    Post Count: 3

    HI ALL,

    THE FORUM LOOKS VERY INFORMATIVE – HOPE SOME OF YOU CAN ASSIST WITH MY QUERY.

    We are a young couple & the recent xtension in FHOG prompted us to jump on the FHO bandwagon.

    My wife has an account with CBA – they have given us a pre-approval (not completely sure what this means) – in the last couple of days they have asked for few docs but won't tell us how the process flows!!

    We are looking at borrowing around 350K – v had also met with a broker who had advised that v apply for the loan in 2 installments (1 for the land & the other for building – so 150K & 200K resp) – We need to have the contrats signed by 30th Sept to be eligible for the grant.

    Do I still continue with CBA or see the mortgage broker – What are the chances that CBA may decline after the pre-approval?
    What factors could affect our approval? – I have been in my new job for over 2 months & my missus over 4 months – we both individually earn around 50K per annum.
    No defaults or anything.

    What are our chances??

    Profile photo of lifeXlifeX
    Member
    @lifex
    Join Date: 2004
    Post Count: 651

    Rule of thumb for servicability:

    It used to be that the banks would lend to full time workers as long as the loan repayments were not more than 30% of your AFTER tax income.

      So as a rule of thumb you would need $400 p.w to cover the interest repayments on loan. And an income after tax p.w. of about $1350.

       Banks usually like a deposit of 20% + money for all the closing costs on the loan.

       So about $18k closing costs plus about $70k deposit would put you in a good position. (remember you have $24k from govt grants to help here)

        Personally I don't like CBA as a lender. I avoid them like the plague.

       I find that Mortgage Brokers a lot better when you are unsure if you qualify for a loan. Remember that every time you apply for a loan and it gets rejected a big black mark stinks up your credit record.

      However…..  a pre-approval is a very good sign. Best of luck.

    Profile photo of propertunitypropertunity
    Participant
    @propertunity
    Join Date: 2008
    Post Count: 136
    ARNOLOGY wrote:
    …they have given us a pre-approval (not completely sure what this means)

      Pre-approval is almost not worth the paper it is written on. It is a quick calculation based on your incomes and debt repayments, but it is subject to their valuation of the property you are purchasing and all sorts of documentary evidence like payslips, loan repayment histories etc. It is good for only knowing what kind of ball-park figure they will lend you so you do not look at property you have no hope of getting or conversely you can look at property worth more than you thought you could afford.

    ARNOLOGY wrote:
    ……but won't tell us how the process flows!!

    Bad service at this part of the deal – before you've even become a home loan customer does not bode well for them. They are flat chat busy with the volumes of loans they are doing, but that is no excuse for bad service in my opinion.

    ARNOLOGY wrote:
    Do I still continue with CBA or see the mortgage broker – What are the chances that CBA may decline after the pre-approval?

    I'd be seeing the Mortgage Broker.

    ARNOLOGY wrote:
    What factors could affect our approval? – I have been in my new job for over 2 months & my missus over 4 months – we both individually earn around 50K per annum.

    The salary is good but the long term work history does not look so good. They may turn you down based on this. That is why a good Mortgage Broker should be able to assist. He/she will have other lenders if CBA do not like your work history.

    ARNOLOGY wrote:
    No defaults or anything.

    This is also good.

    Don't get too discouraged if one or two say No. Be determined. It is an excellent time to be taking the free cash on offer in my opinion. If it does not proceed for you now, then get some work history and some savings history going and you will look like a better risk to a lender down the track and start then.

    I trust it all works out for you.

    Profile photo of nitrodropsnitrodrops
    Member
    @nitrodrops
    Join Date: 2009
    Post Count: 132
    propertunity wrote:

    Pre-approval is almost not worth the paper it is written on. It is a quick calculation based on your incomes and debt repayments, but it is subject to their valuation of the property you are purchasing and all sorts of documentary evidence like payslips, loan repayment histories etc. It is good for only knowing what kind of ball-park figure they will lend you so you do not look at property you have no hope of getting or conversely you can look at property worth more than you thought you could afford.

    Sorry man, like to hijack this thread. I am a newbie looking in purchasing my 1st new property too.

    May i ask the follow qns.

    1.) what are the chances that the final approval fails even though the pre-approval is approved?

    2.) how long does the final approval normally takes?

    Ta
    Nit

    Profile photo of ARNOLOGYARNOLOGY
    Participant
    @arnology
    Join Date: 2009
    Post Count: 3

    Thanks for the info guys!!

    Profile photo of propertunitypropertunity
    Participant
    @propertunity
    Join Date: 2008
    Post Count: 136
    nitrodrops wrote:
    May i ask the follow qns.

    1.) what are the chances that the final approval fails even though the pre-approval is approved?

    Nit, I don't want to be alarmist. If you have a steady, stable job history, payslips, a good credit record, and in most but not all cases some genuine savings, then you will be able to get a loan.  However, I have seen the final approval fail when the property being purchased does not come up to the value as assessed by the lender's registered valuer. It is all very good & well to be the 'winner' of a house purchase by offering the highest amount (which I've seen a lot of FHBs do) but if the valuer says it is not worth the money you are offering then you either have to put in more of your own cash to make up the difference or you don't get finance.

    nitrodrops wrote:
    2.) how long does the final approval normally takes?

      Lenders are swamped with applications. Sometimes as much as 2 – 3 weeks. I just had a FHB client that took 3 weeks….and even then his Mortgage Broker had to physically drive the additional documentation over to the processing centre and demand they look at it then & there – that was after waiting 2.5 weeks.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,018

    At the moment 2-3 weeks is swift with a lot of lenders taking a lot longer than that.

    Some lenders are taking 14-20 working days to open the application let alone approve it so expect to be in for a lenghty wait and lot of additional questions and documentation requests.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

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