Does Finance Expire?
Does finance expire and what are the types of offers available?
Are you aware your finance offer expires? This has been a bigger issue for home buyers since the RBNZ have introduced legislation around lending caps. The banks have reduced the duration finance offers last, in part, to limit their exposure should there be any further changes.
Expiring finance and managing conditions
The main point to take away from this blog post, is to understand obtaining an approval is only the start of the finance process, It then must be maintained, updated and renewed where necessary, along with managing any outstanding conditions yet to be met. These time frames vary between the lenders but are generally 60 to 90 days.
At Loan Market we work with you through this whole process to ensure finance does not expire and conditions are met, so funds are available within the appropriate time frame.
With the banks, you manage your own expiry date and conditions. I cannot stress enough how this is probably our biggest unsung strength as clients do not generally realise (until explained) how their finance is maintained and managed.
Banks have a big workload and are generally too busy doing everything else to consistently keep in touch with every client regarding finance expiry and outstanding conditions. We are focused solely on your mortgage and keep every client updated.
If you are looking to buy a house, we can arrange a pre-approval, so you know exactly how much you can borrow. Adding your deposit, you will then know your maximum purchase price. You will then be ready to go to auction or make a deadline sale offer, with certainty of knowing what you can borrow.
A pre-approval is valid for 60 to 90 days, depending on which bank provides your pre-approval. If you have not purchased in the 60 to 90-day timeframe, we will arrange to have your pre-approval extended. It is important to have a pre-approval in place for finance certainty with the ever-changing legislation. We will keep in touch with you to make sure your pre-approval still suits your needs, for what you are looking at purchasing.
Once you have found a particular property or section to purchase, you will receive a conditional offer. It is conditional as the banks have certain requirements that need to be met or information provided, to satisfy their lending criteria before they can provide you unconditional finance. Conditional offers are valid from 60 days to 12 months, depending on property purchase or if you are building, and again dependent on which bank.
We will work with you pro-actively to get your conditions met to enable you to go unconditional in time for your settlement date. When building we will proactively stay in contact with you monthly, to check on your progress, and work with you to gather all the documentation required to meet the conditions of your lending. This is very important to make sure you go unconditional in time for when your first build invoice needs paying. You do not want your build held up because your finance documents are not ready due to not providing the banks with documentation to meet your conditions. We make sure this is a smooth process, and you have your finance ready to go.
An unconditional offer is a finance offer from a bank for a particular property you are purchasing, with no other conditions required. You will need your finance offer to be unconditional before you settle on your property, as the banks will not provide the finance documentation without all the conditions of your finance offer being met. Unconditional offers are valid for 60 to 90 days, depending on which bank the offer is from.
Is there a difference in lending between ‘off plan’ and ‘land and build’?
Buying off plan is when the property is yet to be built, and you buy at today’s prices, but do not pay for the property until it is completed and code of compliance has been issued. This is also called a turnkey property. Finance for turnkeys can be approved up to 12 months in advance of your settlement date.
We keep in contact with you to make sure the build is on track, so your finance does not expire, and the loan is documented in time for settlement.
New builds are when you purchase a section, and build your own house. The banks will provide lending for the section and then the build. You then have the option of a fixed price contract with a builder or a labour only contract. You will receive conditional finance for your build project.
Think of us as your private banker who is there to work with you to ensure your finance remains valid. There are plenty of horror stories out there if people thinking they have finance in place but it his slipped past expiry date then bank makes some policy changes so the reviewed again but fails for one reason and another.
Work with us and we provide the professional support and comfort so you can sleep at night, knowing your finance offer is being managed with you.