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“Idō shite kudasai”
I looked back… a smirking Japanese boy of 8 looks up at me.
Hesitantly, I snake around the chain link fence and let him move past.
This is it, I say to myself… if a kid can do it, I can bloody well do it.
OK so you might be thinking, what is he on about?
Well, MrsFrugalSamurai and I spent the last few days in the Australian Outback… or more specifically, in the dead centre of our great country, where we visited the famous Uluru, or Ayers Rock.
It was quite an incredible experience and I can totally see why many who come, regard this as a deeply spiritual and revered place.
And yes, we did climb it – initially I was a bit reluctant to do so, but succumbed to herd mentality and FOMO as we followed the other tourists up.
Now, the first thing you notice when climbing, is that maybe you should not be climbing.
Followed by a realization of how precarious and steep and DANGEROUS it is.
Followed by a muffled cry for help.
Here’s a picture of MrsFrugalSamurai oblivious to it all…
That’s right, it’s really just one chain link fence, built in the 60’s separating us from a sheer drop to… death. It probably didn’t help that a) I am terrified of heights, and b) I am terrified of heights.
What could I do? Go back? Well yes, but that’d make a pretty boring story – I have you, my loyal readers at heart after all.
So instead of mulling over the consequences of letting slip a 50 year old chain over 600m up, I just tried to distract my mind on other things.
Things such as a question which MrsFrugalSamurai asked me the previous night.
About how her friend’s friend’s cousin’s sister’s brother’s friend’s cousin or someone named “Fred” was looking for a loan because the bank rejected his formal approval, when he already had a pre-approv… what’s that? What’s a formal approval?
Oh sorry, got a bit ahead of myself.
Pre-Approval vs Formal Approval
When you’re looking to borrow money to buy a house, you typically approach a lender and obtain what’s called a pre-approval.
This piece of paper gives you an indication, that based on your current set of financial circumstances, the bank is able to lend you a certain amount of money.
Most people like having pre-approvals in place, because it provides some sort of certainty so they can continue their search and hopefully make an offer on a property.
However (as Fred found out), pre-approvals can be easily reneged on by the banks, as certain “conditions” must be met in order to move onto formal (or unconditional) approval.
Um, usually it’s about maintaining your income levels and buying a standard type of property (read on what type of property banks like/dislike here).
From what MrsFrugalSamurai tells me, Fred changed his employment status from a full-time employee to a full-time contractor with the same employer.
He obtained a pre-approval from a bank whilst he was an employee, became a contractor, put a deposit down on a house, and was rejected by the bank for a formal approval.
At face value, I would imagine it’s because the bank deems Fred more of a credit risk, because his new employment status has a) just started, and b) potentially less stable (banks LOVE full-time 40 hour a week, 9 to 5 working Joes, stability is a virtue).
As a contractor, it’s hard to justify that you’ll be able to maintain the same amount of hours and hence income as before, especially if you’ve just started.
So don’t think that by having a pre-approval – everything is locked in.
You’ll find that a final assessment is completed once you’re ready for the formal approval. It’s only when it becomes “unconditional” that you can breathe a (small) sigh of relief (breathe a bigger one when the property settles).
Before any financial decision, at the very least, speak to a professional to get an understanding of what the potential consequences may be. It can be as simple as walking into a bank branch and asking them.
Sure, they might not be knowledgeable, but they have access to the people who are.
What about Fred?
I think he actually has a case for appealing the decision, given he is a special case (in the unique sense, not in the derogatory, strange sense, I mean, I’ve never even met the poor guy – I’m sure he is a fine, upstanding young man).
This is because he works in the medical field, and you’ll find most lenders have a special (that word again!) way they treat medical professionals. There’s more grey areas which can be applied.
Although I think he might have gone down the medical policy in the first place? In which case it sounds like either a naive lender or credit assessor has picked up his file… or perhaps there’s more to the story?
Anyhow, if I was Fred, I’d be strongly looking for a mortgage broker specializing with working with medical professionals to see which other lender might give his loan the green light, or at least going back to the bank and appealing his decision…
So I’ve got a secret to share.
I was NOT thinking about Fred and his financial situation during the climb.
What, are you crazy? You think I’m going to be thinking of anyone other than MYSELF, SIX HUNDRED METRES up a bloody rock in the middle of the outback with NO medical or emergency personnel for 450km? Tell me you’re dreamin’…
Nah, all I could think about was, “one step at a time buddy, and remember, if you fall, make sure MrsFrugalSamurai comes with you, for better, for worse you see…”
Hahahaha joking, joking.
I wouldn’t do that to her, but that snotty little Japanese kid on the other hand…
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P.S. If you are reading this Fred, and want a bit more info – let me know! Or let MrsFrugalSamurai’s friend’s friend’s… bah… we have the internet now, you’ll find me, good luck!