Home Loan Pre-Approval

Any general questions you might have in regards to loans and finance.
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Joined: Wed Apr 14, 2010 9:03 pm

Home Loan Pre-Approval

Postby kedwar » Wed Apr 14, 2010 9:09 pm


Three weeks ago my partner and I were pre-approved for a home loan for the amount of $500,000 including mortgage insurance. Since this time we have found a property and have submitted an application for formal approval, the bank has approved our application, however the mortgage insurer has said we now have to pay the total amount of mortgage insurance. This was not allocated in our budget and at $16,000 is a large sum to come up with in a short period of time.

We have a good history with the bank, i.e. have had a number of loans and have always paid on time, we have both been with our current employer for 5+ years, had a 5% deposit which was a gift and further genuine savings. We have also been renting for the past 3 years and rental ledgers indicate that our rent has always been paid on time.

Can you please advise if there is anything we can do? Should we put our case to the bank Branch Manager to see if they can do anything? It is very disappointing that our pre-approval is no longer approved within a matter of three weeks even though our financial position is the same.

Any advice would be greatly appreciated.


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Otto Dargan
Mortgage Specialist
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Joined: Sat Sep 06, 2008 5:55 pm
Location: Sydney, Australia

Re: Home Loan Pre-Approval

Postby Otto Dargan » Thu Apr 15, 2010 8:43 am

Hi Kathryn,

Unfortunately your situation is all too common in the finance industry. Many lenders either do not do proper pre-approvals meaning they give people a pre-approval however they do not actually assess the loan! In other cases they don't get into the finer details such as if the LMI will be added to the loan or if you have to pay for it from your own funds.

Some lenders such as ANZ and Westpac always require you to pay the mortgage insurance, they can't capitalise it on top of the loan amount. Others such as CBA and St George have complex guidelines as to how much you can add on top and in what situations you are eligible to borrow over 90% of the property value.

It is highly unlikely that the bank manager can do anything if you are borrowing 90% or 95% as banks have very strict requirements with home loans at that level of borrowing. We have some lenders that can lend up to 95% + LMI as long as you have a good credit history, stable employment and genuine savings so if your bank isn't going to help you then please give us a call.

Alternatively the other option that may suit you is a family pledge home loan (guarantor loan). This would involve your parents providing a security guarantee using their property. The guarantee would be limited to 20% or 25% of the loan amount. In this case you would pay no LMI whatsoever!
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

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