Ready, set, borrow
Want a fast approval for your loan? Get your act together! say the mortgage lenders.
Wednesday, May 26th 1999, 12:00AM
by Paul McBeth
Want a fast approval for your loan? Get your act together! say the mortgage lenders.
It comes as no surprise that a lot of people leave arranging their finance until the last minute, they don't get the best deal and they forget a lot of the extra arrangements and costs involved.
William Cairns of mortgage bankers Cairns Lockie says there's nothing worse for the lender than "Rush rush rush". He says some common hold-ups come from borrowers not having all the information ready - and lenders not telling people clearly what they need.
"One example is people forming a trust or, even worse, a company to buy a property," Cairns says.
"They might be buying a small block of flats and, come settlement day, there's no company registered."
Then there are the borrowers with the three or four week settlement who head off to Fiji for a couple of weeks, not bothering to arrange finance before they go.
Ross Davies, Manager of mortgage funds provider Interstar, says that borrowers "are often knocking on the door of the finance date and only just getting organised".
He says that, particularly when people are buying a house on a low deposit, they underestimate all the other costs involved such as legal costs and lenders mortgage insurance.
"In some cases, a registered valuation may be required and often this doesn't get arranged. You need to talk to people and be clear on who does this and who does that," Davies says.
"A lot of institutions will now give you a pre-approval and that can be a real advantage, so you can get an idea in advance."
As Cairns Lockie puts it in a recent newsletter, all applicants for mortgage finance today want a fast approval; and most of the work in obtaining that fast approval is up to them. So, some tips for speeding up the process:
For your loan application:
- Don't leave anything out
on the application form (contacting you for missing information all takes time).
- Check the attachments needed and include them all (eg sale and purchase agreements, payslips, company or trust accounts).
- If you're refinancing, don't forget a copy of your current mortgage lender's mortgage statement ("this is essential as no lender wants to refinance a mortage that has had problems in the past," Cairns Lockie says).
- Clearly inform the lender what you plan to do with the funds. Just because it's obvious to you, it may not be to the lender.
Other stuff to sort out:
- Contact your solicitors as soon as possible. They need to be involved when you obtain a mortgage and can also advise you on the best possible structure in which to hold the property (whether it's in your own name, a partnership, trust or company).
- If you do plan to borrow through a trust or a company, these take time to set up. Trust deeds have to be prepared for trusts and information sent to the Companies Office for companies: all this has to be in place before settlement day.
- If your loan has been approved subject to any conditions (such as a registered valuation) don't leave these until the last minute to sort out.