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Buying a home is an exciting experience, and you will quickly learn the process and steps you will need to go through before you get the keys and move in.
Getting a loan pre-approval can help you get one step closer to your new investment property or family home. It is not mandatory in the home buying process, but indeed it can make your life easier.
Usually, it is recommended to have pre-approval before making an offer on a property, but it is commonly misunderstood. Here are essential things you need to know about pre-approval.
A loan pre-approval implies that a lending institution has agreed, in principle, to borrow you a sum of money towards the purchase of your property but hasn’t proceeded to final approval. It helps you narrow your search based on your budget and negotiate with more confidence.
There are two types of pre-approvals. You will need to give income details, personal information, assets, expenses, and debt details for both.
This type of pre-approval can often be received quickly, either within few hours or on the spot. However, the finer details of the documents and credit report have not been evaluated by the assessor.
This is where the bank’s credit department performs a full assessment, including conducting a credit check and reviewing your documents. However, this type of pre-approval is not commonly used and takes few days.
Note: When a lender runs a credit check against your name, it leaves an enquiry on your file. Having multiple enquiries can harm your credit score. Hence, it is recommended not to go for this type of pre-approval.
For most lenders, pre-approvals are valid for up to six months. When applying for a pre-approval, speak with your bank about the expiry date and what will happen if you fail to locate the property within that time frame.
You may not be approved if your circumstances change.
If your financial situation changes after being pre-approved, the bank will need to reassess your application. Such circumstances may include:
These changes don’t significantly indicate your application will be rejected, but you should consult your lender or home loan specialist about how it will impact your situation.
One of the conditions in the pre-approval is “subject to satisfactory evaluation.” Making an offer on a property is generally made after receiving the pre-approval.
When shortlisting properties, discuss with your lender or mortgage specialist what types of properties are acceptable.
There is always a probability that interest rates could change subject to market conditions. For instance, if the interest rate climbs, it indicates the maximum amount you can lend may decrease.
Jammaya purchased an investment property in Queensland. She’s taking advantage of our HiLo investor loan product which enables clients to get a 0.75% interest rate on their owner occupier home loan! Many clients are saving thousands per year with this amazing investor-only deal!
Leoni completed a purchase agreement for her first rental property. She secured a fantastic interest rate and her new property is optimised for maximum tax deductions.
“I was offered the rate, checked it with my bank, went into another branch and no one could match it!”
Jammaya purchased an investment property in Queensland. She’s taking advantage of our HiLo investor loan product which enables clients to get a 0.75% interest rate on their owner occupier home loan! Many clients are saving thousands per year with this amazing investor-only deal!
Leoni completed a purchase agreement for her first rental property. She secured a fantastic interest rate and her new property is optimised for maximum tax deductions.
“I was offered the rate, checked it with my bank, went into another branch and no one could match it!”
Jammaya purchased an investment property in Queensland. She’s taking advantage of our HiLo investor loan product which enables clients to get a 0.75% interest rate on their owner occupier home loan! Many clients are saving thousands per year with this amazing investor-only deal!
Leoni completed a purchase agreement for her first rental property. She secured a fantastic interest rate and her new property is optimised for maximum tax deductions.
“I was offered the rate, checked it with my bank, went into another branch and no one could match it!”