When is a preapproval not a preapproval?
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GRA Blogs
Articles by John Rowe.
Even before Winston Peters made his announcement that he would form a coalition government with Labour, we were seeing some disturbing trends in the banking sector. You need to be aware of these if you are looking to buy a home or investment property.
There have been a number of cases where bank customers have been granted preapprovals, only to have their finance declined at the last minute. This can have serious ramifications, especially when a contract is unconditional (as is the case when buying via auction). The purchaser is liable for penalty interest if they can’t settle, and of course the vendor will be out of pocket (which may have ongoing negative consequences if they were planning to use the money to settle on another property purchase).
The excuse the banks have been using is that the value of the properties is lower than the purchase price, and with the market softening they are protecting their position. On top of this, we have now had a change of government and no one really knows how this will affect the property and finance markets. So, we expect caution to reign supreme.
What should you do if you are a property investor or planning to buy a home?
• Make sure you deal with a good mortgage broker, as they will be able to assist you. Contact us for a recommendation if you need one.
• If you are looking at a particular property, double-check with the bank that they are OK with it before you make an offer or bid at an auction.
• We also encourage you to watch the video recording of the Economic and Property Update Post-Election Special webinar with Matthew Gilligan and Tony Alexander. They discussed the election result and how this will likely impact the economy and the property market.
John Rowe
Retired Partner, Consultant to GRA
© Gilligan Rowe & Associates LP
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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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Hi Salesh, I just wanted to send you an email on behalf of GRA to say how fantastic we have found your company to date. As you know, Ben and I joined GRA a couple of months ago and have just found you so amazingly helpful in getting our new property set up correctly and sorted out. We have what I would consider a rather complicated structure as a result and it’s a fantastic feeling to know that we are getting everything done in the best way possible. We have just had approval to put a minor dwelling on the property which will make a massive difference in terms of cash flow and obviously value, something we would never have even thought of without GRA and which we are very excited about. During the buying process we attended a seminar with Matthew and from the outset thought he was fab. We therein signed up for property school and found this nothing short of fantastic. The content was relevant, up to date and comprehensive, but more importantly it was taught in a way that we could actually understand and really get value out of. I wanted to mention also, that everybody GRA have recommended to us has been just so efficient and absolute masters at what they do. A wonderful network of people that we feel very lucky to now be able to call on. From Kris Pederson and Bryan Rist who put our mortgage together to the insurance guys they then referred us to, I’m super impressed. Within GRA, Ellery has probably turned things around for us faster than I’ve ever known before, something which we appreciated so very much when it came to crunch time. She’s always a pleasure to deal with and again, we’re stoked. We’ve just settled on the property today and are about to go and get the keys. I’m pretty pumped and hence this email is probably rather excitable. So, a massive thank you to you Salesh, the partners for such a fabulous 6 weeks at property school and everyone at GRA for their help. May this be the start of our property empire. Thanks again, - A & B - July 2015
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