Pre-approvals and why you need them...

Buying a home is likely to be the biggest purchase you will ever make, how often do you go out and spend say half a million dollars. Let's make no mistake, it's stressful, and it's a big deal.  What we're talking about today is how to help manage some of that process by being prepared before you start shopping by obtaining a pre-approval from the lender.

A pre-approval will determine exactly how much you can borrow and how much your repayments will be. Pre-approvals are far more accurate than mortgage calculators and other estimators as they take into account your entire financial position, credit score, credit report and circumstances. An online calculator cannot do this.

So what are some of the main advantages of a pre-approved loan?

Save Time

What if you find the house of your dreams? Next you go through the entire process of presenting an offer, having it accepted only to find the bank wont provide enough finance to complete the purchase. This can be both embarrassing and frustrating. Agents will soon start to pile pressure on you to exchange and you'll be frantically trying to find someone to approve you last minute.

Aside from that, it takes a lot of time for you to find that property and go through the processes only to discover you can’t afford it. If you have pre-approval you'll know exactly how much you can spend on your home. This saves you time since you can narrow down your choices immediately. It also saves a stack more time, as you already know the finance will be available and you don’t have to wait weeks for the bank to confirm their support or be searching for that document your lender wants. All the hard work is done upfront.

Save Money

Figuring out the most ideal lender, loan product, loan combination of fixed and split loans, researching how you feel about the options, possibly asking your parents or friends for their opinion on rates, this can all take time. We suggest doing this well before you are locking in a property purchase, the pre-approval stage is a great time to weigh up the options in depth and not rush this process. You'll feel less overwhelmed about the decisions you have to make. Once you're buying, you'll have building, pest, settlement time frames, and removalists to organize, so this is one less thing to think about.

No last minute hunts for paperwork

A pre-approved applicant is an organized applicant. I'm not going to lie here, if you want a lot of money from the bank you're going to have to provide enough paperwork and ID to confirm that you can and will repay them! Sometimes it feels like you need to provide blood and DNA samples. This takes time and can be stressful for applicants who are under pressure from the agent to exchange. We expressly advise NEVER to exchange prior to obtaining full approval. Therefore if you get all of this paperwork out of the way prior to shopping on the market for a property, you will find the whole process about 80% less stressful then if you went shopping for a home without pre-approval. On this one you just have to trust an experienced mortgage brokers advice, our pre-approved clients can't believe how much easier the process is. It's a time and pressure thing. We can also identify any unknown obstacles the bank uncovers well before you have the dream home in your sight.

There’s No Cost

It is important when you are speaking to your mortgage broker to know all the possible costs associated with any pre approval mortgage application. Pre approved mortgage finance, with most banks and lenders is fee free, and the pre approval lasts on average for 3 to 6 months, and is easy to update if your circumstances haven't changed.

If you have a pre-approval with a lender, this often enables us as your brokers to order a valuation upfront the minute you have 'offer and acceptance' on a property.

Instant Credibility

The real estate agents you negotiate with are likely to take your offer more seriously, knowing that you have pre-approved finance in place.

Strength To Negotiate

The pre-approved finance may give you more negotiating power on the property you want to purchase. With your finance pre approved, the seller may have more confidence in your offer and the associated finance application. As your broker we are happy to discuss the strength of your approval with agents, because if we can cite the approval conditions (with your express permission), and if the approval is only subject to valuation, this can be a strong draw card.

A pre approved mortgage application doesn’t always mean that your home loan will be approved, once you have found a property to buy. The bank or lender will still (generally speaking) need to value the property you have brought, and meet any other conditions.  Generally speaking though, if your home loan has been pre approved subject to valuation, you can move forward to full approval very quickly.

 

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