If you’re looking to purchase a property at auction, or simply want to be confident when negotiating with real estate agents, pre-approval on your loan is the way to go.
Getting pre-approval on a loan will not only make you look more attractive to sellers, it will also give you more focus when searching for a property. Why? Simply because you will know what is within your budget, and won’t waste time looking at properties beyond your price range.
Here is what else you should know about getting pre-approval on a home loan.
Why is pre-approval necessary?
While you don’t need pre-approval in every property-buying situation it will hold you in good stead. Here is why:
You’ll have more confidence to negotiate with sellers, as you will know what the top end of your budget is.
Knowing your budget also means you’re less likely to make emotional decisions when placing an offer.
Property is typically an emotional purchase, so having clear boundaries will make it easier to get what you need (and want!).
Some sellers will not accept an offer unless you have a signed letter indicating pre-approval.
You’ll have more peace of mind when searching for a property.
Your home loan is pre-assessed by the bank or lender you choose.
This pre-approval is valid for a period of 3 to 6 months.
As a result, you know the maximum offer you can make.
And you know that your circumstances match the lending criteria.
Whether the bank will eventually accept your particular property as security (if you do have an asset to back the loan).
The pre-approval could be subject to certain conditions you must meet.
Not every pre-approval is created equal. For example, some are online applications that do not hold as much weight with sellers.
Others are formal documents signed by the lender. The second is more likely to be accepted by sellers.
Does pre-approval mean I will get approval?
It may sound strange, but having pre-approval doesn’t guarantee your loan will be approved. Of course, it is likely you will achieve approval, but nothing is certain until you actually have official sign-off from your lender.
What is pre-approval exactly?
There are many different kinds of pre-approval available from lenders, so speak to your mortgage broker about what type best suits your needs.
To give you an idea of what to expect, here is what pre-approval looks like:
There are variables though, for example:
Whether the bank will eventually accept your particular property as security (if you do have an asset to back the loan).
The pre-approval could be subject to certain conditions you must meet.
Not every pre-approval is created equal. For example, some are online applications that do not hold as much weight with sellers.
Others are formal documents signed by the lender. The second is more likely to be accepted by sellers.
Need pre-approval?
Contact us about getting pre-approval on your home loan. We will ensure you get the kind of pre-approval more likely to be accepted by sellers, so you have peace of mind when exploring the market.
Get started now.
Financial Advice Disclaimer: This information is general in nature. Mortgage brokers do not provide financial advice. Clients seeking financial advice will be referred to a qualified financial planner.
