Three steps to home loan pre-approval

Spring is just around the corner which traditionally means the property market will start to warm up. If you are considering making that next property purchase, it is recommended to get a home loan pre-approval first. Not only does it save you time on your property search but also protects you from overspending at an auction.

How long does pre-approval take?

Turnaround times for pre-approvals vary for each lender from the time of application submission. Verify with your broker the expected timeframe for your preferred lender. Providing us with the correct documentation up-front will help achieve a speedy turnaround.

Follow these three easy steps to get your home loan pre-approval.

	Collect your documents Proof of identity Proof of income and savings Proof of living expenses and other expenditure Evidence of current assets and liabilities.
	Talk with us to find out How much can you borrow How much you require for a deposit How much you can repay each month If you qualify for a government grant or concession.
	Submit pre-approval application with a lender We fill out the forms and do all the work The lender provides confirmation in writing Pre-approval lasts for 3-6 months.

If you’re ready to start your hunt for a new home or investment property, get in touch with us to organise pre-approval early so you are ready to act fast when you find the right property.

Benefits of a home loan pre-approval

1. Confirm your borrowing power

   Before you start searching for a property, it’s important to confirm your borrowing capacity. Online calculators can give you a general indication of what you might be able to borrow given your income and savings. But they don’t confirm what size repayment you’ll be able to make after you meet your other living expenses and financial commitments.

   With a loan pre-approval, you’ll know exactly how much you can afford to pay for a property. It gives you a solid understanding of your finances and a clear spending limit. Getting pre-approved through a reliable broker (like me) can also help identify possible issues that you may not be aware of, as well as spot something that may have been overlooked.

2. Save time on the property search

   Imagine spending a lot of time looking for your dream home, only to be rejected because you can’t secure finance. Getting a pre-approval will confirm how much you can borrow and help you save time, avoid wasted effort looking at properties you can’t afford, and prevent disappointment.

3. It gives you a competitive advantage

   In a competitive property market, it’s important to move fast. Sought-after properties sell fast and having a pre-approval allows you to make an offer as soon as possible. Pre-approval gives you the ability to make an offer on a property on the spot, with the confidence of knowing you’ll be able to get the finance organised quickly. It also signifies to vendors that you are the real deal. If you are bidding at an auction, a pre-approval also helps you negotiate from a position of strength.

4. It protects your deposit

   Before you hand over your deposit money, it pays to make sure you can get the home loan you need to complete the purchase. If there is some issue with your eligibility or a lender won’t approve the amount you need, you could potentially lose your hard-earned deposit.

   Pre-approval gives you an important financial safeguard. And if you’re buying at an auction, pre-approval is particularly important because your deposit is non-refundable. Once the hammer goes down and you’ve made the highest bid, you’ll be locked into the purchase. For that reason, we recommend you make sure your finance approval is rock solid first.

5. The property must also get evaluated

   Once you find the right property, you’ll still need to make a formal loan application to the lender. As part of this process, the lender will require a valuation of the property you select. Aside from confirming a budget for a home loan, it is also important to confirm if the loan will be approved by the lender for the property you chose. This is an important step as there are some properties that may not be acceptable to some lenders for the following reasons: if it is remotely located, its value is not enough to back the amount of the loan, or the location is ”risky”, among other concerns.

Apply for a loan pre-approval today

If you’re ready to start your search for a new home or investment property, get in touch with us today so we can arrange your pre-approval. We will help you understand the process, which will allow you to shop around for your dream property with confidence.