How to avoid finance falling over on your property deal
There has been some interesting articles this week relating to property deals (it appears mainly attributed to Auckland) falling over at the last minute due to finance. The articles implied buyers had finance pre-approved, but when it got down to the offer agreement, the banks were pulling out or asking for valuations.
In the current environment this is not an unusual situation, even when you have a 20% deposit. Here are some reasons a bank may not like the property you are buying, decline the loan or ask for a valuation or additional info such as a builders report:
1. Your offer price is well over their online estimate—some banks are more lenient on this than others but you need to be aware of it
2. Your pre-approval has expired and your borrowing capacity is not as big as it was
3. The sale and purchase agreement has highlighted some disclosures that the bank needs clarity on
4. You are offering on a non standard property
Here are some tips to help you:
1. Use a mortgage adviser like us, we can talk to different banks simultaneously and give you straight answers quickly
2. Keep in contact with your mortgage adviser around when your pre-approval expires and what you can and can’t do with your offers
3. Do not make cash unconditional offers without the bank checking your draft offer first
4. Try to avoid properties with obvious issues such as unconsented work that is disclosed on the sale and purchase, unless it can be rectified before settlement.