July 01, 2014
Yew Kong Lye
Tension and stress mount when a home loan application is in progress. Whether it is a refinance or the purchase of a property, the pressure is the same. There’s always a dateline to be met and that will invariably cause pressure and result in stress.
To alleviate and minimise the stress when you apply for a home loan, it is good that you understand what needs to be done and what is involved in the home loan application process. This will provide an insight and help you understand the process so that you can plan for it and not be overwhelmed when things are not happening as you had expected, hoped or imagined.
I will split this into two articles and this one will deal with what is in your control to minimise loan application stress. The second article will deal with the process and what happens when a home loan application is lodged with a bank. Hopefully, it will give you an insight and act as a guide for your expectations. When you know what to expect, stress and pressure seems to dissipate.
BANKS ARE BIG FAT ELEPHANTS
Understand are big machineries that are very often not very well oiled and for that reason don’t move very quickly, like big fat elephants. So, give them a lot of time. When you buy a home and sign a contract and expect to move in 2 weeks later because you want to enjoy your new home immediately, you are setting yourself for trouble and disappointment. In the next article you’ll understand why they need more than 2 weeks to settle because there so many processes to be followed.
If you refinance for additional funds for whatever reasons like for a renovation or debt consolidation and need it urgently, don’t start making enquiries or starting the application process when you need the money. That’s because banks are big fat elephants that require a lot of time before they can hand you the money.
You must understand that banks generally cannot settle on a loan application in less than 30 days. So, signing a purchase contract with a 2 weeks settlement is basically asking for stress and trouble. Though they claim they can settle in 30 days I would set a 45 day or more settlement just to keep my sanity and not have my blood pressure head northwards. If you’re refinancing bear in mind that you are exiting your current lender and they will not stretch themselves to speed up the process for you. In fact, they’ll be as obstructive as they can be according to which side of the bed they started the day with or if mother-in-law has been visiting recently. I would suggest that for a refinance, give it 6 weeks before you’ll have access to your funds.
YOU ARE IN CHARGED OF YOUR STRESS LEVEL
Why are some people calm under pressure and some are just born stress heads? You are not genetically pre disposed to either. It is an acquired “syndrome”, a learned state of mind. When it comes to a home loan application, some people will focus on the worst outcome, get all worked up and before you know it, stress level has gone through the roof. Other people will perhaps think: “what’s the worst that can happen? Maybe, get delayed another day and it’s not going to be the end of the world”
In my experience, I’ve come across home loan applicants who would call me hour on the hour for an update especially if they’ve made a mistake of signing an unconditional contract. They just don’t understand that it has to go through due process and there’s very little the broker can do to make the application move at the speed the client wants. They also need to understand that once it leaves the hands of the broker, all he can do is to follow up making sure that the banks do their jobs and try to escalate the application where possible.
To make life easy for yourselves and lower your stress levels, I have a few tips for you:
- Understand the loan application process
- Understand that the banks are huge slow moving sausage factory
- Give yourselves plenty of time to settlement
- If you need funds for whatever purpose, don’t expect to get that immediately
- Never sign an unconditional contracts
- Look at why you get stressed and work on your mind
- Work with a broker who has good communication system to keep you informed
Research has shown that stress causes cancer. So, it’s not worth it to get all stressed out when you’re buying a home when it can be preventable with some good planning. When it gets tough, just take a Panadol, lie down and stay calm. “God never give you anything you can’t handle, so don’t stress.” Kelly Clarkson. For a stress free loan application experience call 0413 871 888