There’s no need to wait until you’ve found the right property to apply for your home loan. In fact, there are good reasons why you should get a home loan pre-approval before you begin home hunting.
What is pre-approval?
It simply means receiving conditional approval from a lender for the amount you’d like to borrow – which you can get before you’ve even found your ideal property.
Loan pre-approval is free and something your Aussie Broker can help you with, but first let’s take a look at why you should consider getting pre-approval before finding your dream home.
Pre-approval helps you focus on homes you can afford
One of the biggest advantages of home loan pre-approval is that it provides a clear guide for how much you can afford to spend on your future property. This can help to narrow down your search, and avoid wasting time (or money spent on pre-purchase inspections) on homes that are beyond your buying budget.
And, when you do find a place you’d like to buy, having finance pre-approved leaves you free to focus on price negotiations, rather than juggling the stress of arranging a mortgage from scratch at the same time.
Home loan pre-approval is especially useful at auctions
It’s when you’re buying at auction that home loan pre-approval can be especially useful. It lets you bid with greater certainty and avoid the risk of being the highest bidder on a place you can’t afford.
While auction rules differ between states, there is usually no cooling off period at auction, so pre-approval helps you bid with confidence.
Important things to know about pre-approval
While many lenders offer pre-approval, the type of pre-approval can vary between lenders. Your Aussie Broker can take the guesswork out of the process, letting you know which lender offers the loan that suits your needs, coupled with options for pre-approval.
Note too, pre-approval doesn’t last forever – it’s usually good for a set period, often around three to six months. In addition, during the pre-approval process the lender will consider your credit history, and whether you can comfortably handle the loan based your current financial situation. This being the case, pre-approval hinges on your circumstances remaining the same. A major life change like resigning from your job to start a new business with uncertain income, could see you knocked back for full approval later on.
Be aware too, if the lender’s valuation comes in at well below the price you’ve agreed to pay for the property, your final loan application could be rejected.
Pre-approval costs nothing
On the plus side, it shouldn’t cost anything to organise home loan pre-approval. Any fees associated with your loan are typically paid when your mortgage settles.
With no impact on your immediate budget, but certainty and peace of mind for the buying process, it’s worth speaking with an Aussie Broker to know if home loan pre-approval is the right choice for you.
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- Chapter One : Getting started
- Chapter Two : Your Dream Home
- Chapter Three : Money Matters
- Chapter Four : Ways to Purchase
- Chapter Five : Understanding Interest Rates
- Chapter Six : Understanding Home Loans
- Chapter Seven : Lending Sources
- Chapter Eight : Getting Your loan
- Chapter Nine : Choosing a Home
- Chapter Ten : Steps to Settlement