Many of you may have noticed in the media recently stories relating to how size is important when it comes to purchasing apartments. This is a timely warning to all property purchasers. A pre-approval does not mean you can purchase any property; any pre-approval is still subject to multiple bank terms and conditions, including valuation and the nature of the property – such as the location or the size.
The story in question centered around a first home buyer potentially losing his $40,000 deposit due to his purchase property being smaller than NAB would allow. He apparently had verbal approval from his NAB bank manager. However, the manager “mysteriously left the company” before sending out the final loan documents, and as such NAB claims they have no record of any approvals. NAB subsequently informed the young purchaser the apartment was too small to be accepted as a security property by the bank.
Every bank has different rules. This apartment would be eligible as security for a loan at some banks. It wasn’t at NAB, and that’s a longstanding policy, not due to recent rule changes. Coordinating your lending through a finance company – for which we don’t charge a fee – could have helped this young buyer avoid this problem. We’re in constant contact with banks and have an in-depth understanding of their rules and lending criteria. Don’t forget your broker when you’re arranging finance – an extra set of objective, expert eyes helping you through the process can make all the difference.