Have you heard the adage?
“Thou shalt always get a reliable pre-approval before bidding at an auction.”
With no cooling off period and a quick settlement date fast approaching, find out how we were able to help this couple settle on their dream home.
- Summary: To achieve a quick settlement on an owner-occupied property.
- Security: A residential property in NSW with 3 Bedrooms, and 1 Bathroom.
- Property value: $2,288,000.
- LVR and term: 80% LVR, 30 years Principal and interest.
- Deposit: $368,000 approx.
- Solution: Utilising our priority service status with the bank and fast tracking the home loan application.
- Serviceability: Utilised a gifted deposit as part of the funds to complete the purchase.
- Interest rate: 3.19% p.a. variable rate.
The story
Phil and Sarah were a couple with high-paying jobs.
Phil worked as a strategy and operations manager at a major firm earning $223,599 p.a. while Sarah was making a base income of $168,000 p.a.
They had been looking to purchase an owner-occupied property for a while. So when the couple found a property that they really liked, they immediately put down a $228,000 deposit (10% of the property value) at auction.
The settlement date was set.
The problem
The couple initially approached us on 13 August with a settlement date for 16 September.
Typically, you can go through the entire home loan process from the initial enquiry to settlement in 6 to 8 weeks, which wasn’t going to cut it here.
A settlement period of four weeks or less is not recommended since many banks are not able to meet this deadline.
The couple risked losing their deposit.
What most people don’t realise is how much lenders turnaround times vary for pre-approvals and especially so from pre-approval to settlement.
Lenders tend to drag their feet before getting the property valuation carried out. This is usually a hurdle in the loan process and takes a long time.
After speaking with the clients, senior mortgage broker Vivienne Than quickly established their objectives and requirements.
Also, as part of their funds to complete, they were planning to use a gift.
This was an issue as most lenders do not accept a gifted deposit as funds to complete as these are not considered genuine savings.
The solution
After a thorough preliminary assessment, she identified three key lenders who had a flexible credit policy regarding using gifts as funds to complete and more importantly, a fast turn around time.
Simultaneous valuations were ordered through all three lenders, which were fast-tracked because of her status as a priority service mortgage broker.
The idea was to have a backup plan in case valuations came lower than expected.
Luckily, valuation ordered through a couple of lenders came back at the purchase price.
Most importantly, one of the lenders accepted gifts as funds to complete. Since most lenders require a statutory declaration from the gift giver which in their case were overseas, this created an issue.
However, Vivienne ensured that the lender accepted a statutory declaration from the receiver as an exception to their policy.
Moreover, their professional package was quite competitive for the amount they were borrowing.
Just in case, there were any delays due to unwanted circumstances and to complete the settlement on time, our broker recommended proceeding with both applications simultaneously.
After the client accepted the recommendation of our broker to proceed with both lenders, the loan was formally approved by the bank without any Missing Information Requests (MIR) by 4th September.
Happy ending
The couple settled on the property well before the due settlement date.
In fact, it would have settled much sooner had it not been for the comparatively longer turn around time of this particular lender.
Moreover, they got a great interest rate of 3.19% p.a. on their home loan, which came with a 100% offset account.
Do you need a quick settlement?
Our mortgage brokers know which lenders have the quickest turnaround time as well as being intimately familiar with almost 40 lenders’ policies.
If you need a quick settlement, please give us a call on 1300 889 743 or fill in our online assessment form today.