The consequences of not getting your finances right

I’ve seen it and I’m seeing it. You have a 30-year relationship with your bank. “Yeah, no worries they will lend to me”. That’s exactly what was spoken to me last week by a couple who put an offer on a property without securing their finances. They have a long-standing relationship with their bank, and have heaps of equity in their property, so what was the problem? They confidently put an offer on a property without checking with their bank. Unfortunately, their offer failed, as without confirmed finances it gave no assurance to the property owner that the purchasers finances were secure. Time wasting, disappointing and heart wrenching for that purchaser.

In this market, you have to have all your ducks lined up. You are putting yourself in a disappointing situation if you haven’t had a discussion with your bank or mortgage broker before placing an offer.


Long standing relationships don’t cut it with banks’ any longer. The greatest asset you can have is your ability and security to repay the mortgage, however, you can’t just expect this. You actually have to know this!


Before you ever place an offer on a property, you need to have your finances organised in advance of the offer.


I had a situation once where a vendor put a cash offer on a property and then put his own property on the market. He insisted that he did not need finance. Unfortunately, his property took longer to sell and he needed to settle on the property that he had an offer on in one weeks-time. Unbeknown to me, he needed bridging finance. That’s where his bank ran for the hills and didn’t accommodate him in the slightest. Fortunately for him, I got a good offer on the property which could settle the following week. I guess he had many restless nights until he got the offer on his property!


In analyzing this, he had a long-standing relationship with his bank, and despite this they would not come to the party with bridging finance or a mortgage. The greatest risk is that he could have lost his deposit on the property he was purchasing and lost the property. Every day that he didn’t settle could have cost him a 14% penalty.


Best advice, spare yourself disappointment and go visit your financial institution before you decide to put an offer on a house, otherwise you have a high risk of your offer being outright rejected by the property owner and a huge risk of the bank saying “No” or telling you it might take 15 days to process, By then it’s just too late!


Next week I will discuss using a Mortgage Broker.


Disclaimer - This is a opinion piece written by Linda, and is not the opinion of Ray White.

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