Bank loan processing times are blowing out … and it is costing buyers their properties. What can you do about it?
I want to take a minute to draw your attention to some current issues with bank loan processing times. Why? Because they’re actually costing buyers and losing their contracts, and the contracts are falling over because of the excessive delays that are being experienced. In the days gone by, it wasn’t uncommon to be able to buy property with a two-week finance course and be confident that you’re going to settle in a month. Well, unfortunately for most of the banks now, those days are long gone due to the extra compliance that is required to scrutinise a loan application. Along with this is the fact that a lot of the banks are now severely under-resourced to handle a massive increase in finance applications that are coming through and we are actually seeing loan approvals blow out for anywhere between four to 12 weeks, and this is particularly so with the big banks.
The sad reality now is that quite a few of the banks, due to being under so much pressure, won’t even start looking at your application until it’s been sitting on their desk for two weeks or more. This is it’s actually costing borrowers their properties because the contracts are falling over due to the extended time blowouts, and you’ve got the pain and heartache of seeing the property that you’ve worked so hard to get, slip through your fingers.
How can you protect yourself against these delays resulting in you losing the property and causing much stress? There’s two simple things I suggest that you consider. One is to engage a savvy mortgage broker who has access to a wide range of lenders and knows which banks have processing delays and which do not, because there still are some second tier lenders that are turning around loans very quickly. If you’re worried about time blow outs then getting a good mortgage broker to negotiate through that maze will help you greatly and relieve a lot of that stress. Secondly, start educating the seller’s agents and the vendors or the sellers of the properties that the loan processing side of the equation is going to take longer and negotiate. Get that into the contracts so that the subject, the finance clause and the settlement date reflect the amount of time that’s going to take the bank to get it done. That’s just some food for thought. This is Bushy Martin and you’re watching real estate talk.
That’s the food for thought for this week.
Want to unlock freedom with property and finance? Let’s talk.