Just when you think you’d seen it all something comes out of the blue to surprise you. Then you become accustomed to surprises or shocks. You start to expect it.
I moved to the house that I live in just over 10 years ago. As is usually the case when you move into an existing house you inevitably get some mail for the previous owner(s). After a while you inform the senders to adjust their database and – with the exception of Optus – that mail stops coming.
So, a little over six months ago, I started to get mail that wasn’t mine. I don’t mean it was for the previous owners. I mean the address on the envelope was not my place of residence. Initially, it was for a neighbour so I would just walk next door or across the road and deposit the envelope in their mailbox. Then at Christmas I started to get envelopes addressed to people a few blocks away. The last straw came on 23 December when out of nineteen envelopes in my mailbox only three were mine and most of them were a car trip away.
Initially it was a novelty and I didn’t mind depositing envelopes in my neighbours mailboxes but I started to do my own mini mail run and that’s when I complained to the local post office. When they realised I was in possession of 16 envelopes that had different addresses they started to take me seriously.
My point is that I was so used to delivering envelopes for others I didn’t see it as a problem. I just assumed it in my daily routine. A little like that experiment with the frog in boiling water.
So it is with loan applications. When we first started processing home loans, it was rare to get a rejection. And you soon learned not to process a loan that was likely to be rejected. You talked it over with the lender and they would give you a very accurate idea as to whether or not they would approve the loan. This is an important step as you don’t want to negatively impact your clients’ credit rating. A few weeks ago something changed that cosy process.
We had an investment loan approved for a lady. The property was in the outskirts of Brisbane in a popular suburb with investors. The loan was for slightly more than the 80% LVR so our client was up for Lenders Mortgage Insurance (“LMI”). We received a call from the bank to say that the LMI provider, QBE, had declined to provide the LMI for the loan as they were concerned about over-development in the area.
Remember that the bank had approved the loan. So they believed that the area in which they had security was ok.
What did we do? We asked the lender to try another LMI provider and the loan was approved later that day. This latest glitch is another in a series of processes introduced by lenders that makes it critical for potential borrowers to deal with an intermediary that knows what they’re doing. In the last 12 months there have been so many changes to the processing of loans and the lenders’ risk appetite that potential borrowers would do well to seek advice prior to embarking on a search for a loan.
With us, each of those processes has been like an envelope in my mail box. We’ve dealt with them and added them to our processes. Because we’re a small brokerage we’re able to be nimble and adjust our processes to deal with these minor changes. We also have to stay on top of them as the effects can be cumulative.
So, if your postie is too lazy to deliver mail to your street I suggest you contact your post office before he/she has outsourced his/her job to you. But if you’re seeking a home loan and you’re not sure where to start, seek advice from a broker before you walk into a lender and sign your life away – or worse, negatively impact your credit score.
A broker will not charge you and you’ll receive quotes from many lenders in minutes. So, before you get a spanner in the works get prepared with sound advice. It won’t cost you a cent (unlike a postage stamp).