Bank Loan Approvals – A word of caution

They don’t mean anything, and they never have.

You may think you can go and make your offer in safety.  You can’t.

All bank loan approvals are “indicative”…ie they merely indicate what the bank “might” be prepared to lend.  They all have language which lets the bank pull back from the loan and relieves it from any responsibility at all.

Anyone who doubts this can talk to the hundreds of people that bought apartments off the plans in 2006-7, only to find that when the apartments were completed, their bank reneged on the loan approval, changing (for example) from 80% of purchase price to 65% of the then current valuation (which had of course dropped substantially from the global financial crisis)….assuming they were willing to lend anything at all.

Some of those people have lost everything they own as a result.  Some are now bankrupt.

Banks are not your friend.  They are not loyal.  They will not suck up a loss that can be passed on to you.  They will not take a risk on your behalf and, to be fair, neither they should.  But what they should do is be more up front that their indicative loan approvals are not worth the paper they get printed on.  Buyers beware.


About Ivan McIntosh

I am a partner of Carter Atmore Law...residing in City Road just off the busy thoroughfare of Symonds Street, Auckland, New Zealand....where we are specialist business & property development lawyers, working for both local and international clients. Proud husband to Joanna, and dad to two sons. Passionate rugby supporter. Email: Ph: 64 9 921 5026
This entry was posted in Banking & Finance, Business Law, Commercial Property, Property Law, Residential property, Securities Law, Subdivisions and tagged , , , , . Bookmark the permalink.

One Response to Bank Loan Approvals – A word of caution

  1. Calvin John Mcphee says:

    Thanks for sharing this article. It is really very informative. Other great legally-related articles can also be viewed at

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