Recently there was quite a bit of press about the banks tightening up their lending practises, particularly when it comes to loans for first homes and investment properties. Within weeks we started hearing stories of people whose financial position and budgets were suddenly reduced because they were not able to borrow as much as they previously thought.
We have also come across a number of owner occupiers whose pre-approvals have lapsed and they discovered that they had to go through the whole application process all over again. Some banks apparently aren’t even giving pre-approvals at the moment to certain buyer groups because they are a waste of time when something like 50% of them are never used!
Upon speaking with mortgage brokers we hear that the situation varies from bank to bank and these institutions seem to change their practises daily, so it’s hard for a buyer to keep on top of their borrowing power.
It is crucial that you know your financial position, borrowing potential and the risks involved if you are looking to buy a property. This is especially the case in a hot market, where prices often exceed expectations and bank valuations. You could find the property of your dreams and be unable to act quickly because your finances simply aren’t ready. Time is money in a rising market and any delays could either cost you more money – or cost you the property. And if you overextend yourself you might not be able to get finance and you will lose your deposit and could be sued for losses by the vendor.
Good advice is crucial, and a broker that’s been around the traps for a while will be able to guide you through this minefield.
Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.