If you are in the market for a new home but are happy to keep looking until your dream home comes along, you may consider a pre-approval.
Mortgage & Finance Solutions offers clients a service to assist in having your home loan pre-approved.
There are a number of advantages to having a pre-approval:
- You know what you can borrow in advance and what your repayments would be
- You can go to auctions and confidently bid up to your limit
- You can put in offers quickly if you want to snap up a bargain
- Can save you time and money
For those getting ready to stride into the world of home ownership, the uncertainties of pre-approval can cast a shadow of doubt over an otherwise exciting time. When is it necessary? How long does it last? And what does it involve, exactly?
Pre-approval is a lender’s assessment of your likelihood of being approved for an otherwise suitable loan. The appraisal is made on the basis of your ability to service a loan by looking into your living expenses and liabilities, your credit history, your employment circumstances and how often you have moved home or employment in the recent past.
As it is performed prior to a property being found and chosen, it does not take into account the particulars of a specific property and valuation, which is why uncertainties can arise.
Pre-approval is helpful for those who want to know how much they can borrow before attending open homes, and can be reassuring for new borrowers.
Pre-approvals are usually valid for up to 90 days but, depending on the lender, may be renewed to allow more time to find a property.
It is very important to note that a pre-approval is not a guaranteed loan. It is your potential lender’s way of signalling how much they expect to lend you. This may change on your official application.
Another thing that may cause a lender to decline your loan application after pre-approval is a change to your pre-approval circumstances.
Your pre-approval will also usually be conditional on a property valuation. If your lender does not deem the property a marketable asset, they may not approve a loan.
“We want to check that it is a readily saleable property. That’s the biggest thing. To make sure the actual security itself is acceptable,” says the broker.
Potential lenders need to be wary of the changes that can affect their ability to take out a loan, regardless of pre-approval figures, to ensure they don’t overcommit without a guaranteed source of funding.
Pre-approval is not a guarantee, but is a very useful tool for anyone looking for a property.
Not all pre-approvals are the same!
You may already have a pre-approval from a lender. However, not all pre-approvals are true pre-approvals. We lodge your pre-approval and ask it to be assessed fully by a credit assessor. This gives you a clear and true picture. This won’t leave any surprises for when you do find your dream home.
If you have an existing pre-approval call us today to have a second opinion to make sure your pre-approval is a true pre-approval.
If you have any questions regarding a home loan and would like to arrange pre-approval talk to a Mortgage & Finance Solutions Specialist today on 1300 857 762.