At what point should I get a pre-approval?

Any general questions you might have in regards to loans and finance.
Rick
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Joined: Fri Aug 16, 2019 7:32 pm

At what point should I get a pre-approval?

Postby Rick » Fri Aug 16, 2019 7:34 pm

My wife and I will be getting married soon and her lovely parents have even provided us with a gift deposit of 50K as a wedding present. We are in two minds on where to buy. So we thought of getting a pre-approval for a home loan. At what point should I get a pre-approval?

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Otto Dargan
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Re: At what point should I get a pre-approval?

Postby Otto Dargan » Fri Aug 16, 2019 7:38 pm

Hello Rick.

Congratulations to both of you. Thank you for reaching out to us and welcome to the forums.

You are on your way as you received a gift deposit. If you want to avoid paying Lenders Mortgage Insurance, then it's best to save a 20% deposit.

Getting a pre-approval means your home loan is already pre-assessed by the bank and is valid for up to 3-6 months depending on the lender.

Pre-approval is good so that you know your maximum purchase price and that you meet the bank's lending criteria. Not all pre-approvals are the same. Get a formal written pre-approval signed by the bank or lender.

Please note pre-approval is not the same as final approval. A final approval is only given once you and your wife have selected a property, valuation is done and a formal loan application is sent to the lender.

If you need more information about getting pre-approved for your home loan, talk to us. Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home loan.

Cheers,
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Rick
Posts: 3
Joined: Fri Aug 16, 2019 7:32 pm

Re: At what point should I get a pre-approval?

Postby Rick » Fri Aug 16, 2019 7:59 pm

Is there anything I should be careful of when getting pre-approval?

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Otto Dargan
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Re: At what point should I get a pre-approval?

Postby Otto Dargan » Fri Aug 16, 2019 8:03 pm

Hi Rick,

You’ll need to be careful of the following points when getting a pre-approval:
  • Pre-approvals are recorded on your credit file and could potentially affect your credit rating. Every time you go for a pre-approval, a lender will run a credit check which leaves a credit enquiry on your file.
  • Pre-approvals have an expiration and can last between 3 to 6 months. This is because the financial situation of the borrower or the property market could fluctuate.
  • Since pre-approval does not assess the property the borrower will by buying, then some lenders might outrightly decline the loan for unusual properties. But we have lenders who can look into this as well.
  • If any circumstances arise that there is a change in the borrower's financial situation (change in jobs, taking a personal loan, having children, etc), then your loan will have to be reassessed again.
  • A change in the interest rate affects the maximum amount you can borrow. If interest rates increase, the amount you can borrow might decrease.
Cheers
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts

Rick
Posts: 3
Joined: Fri Aug 16, 2019 7:32 pm

Re: At what point should I get a pre-approval?

Postby Rick » Fri Aug 16, 2019 8:37 pm

Thanks for the word of caution. We are set on buying either of the homes we have decided on. How can we move forward after pre-approval?

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Otto Dargan
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Location: Sydney, Australia
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Re: At what point should I get a pre-approval?

Postby Otto Dargan » Fri Aug 16, 2019 8:39 pm

Hi Rick,

Here are some tips you can follow after getting a pre-approved:
  • Ensure that the property you are looking to buy is accepted by the lenders. To improve your chances of getting approved, know which property types are favoured by lenders or use our postcode location guide for more information.
  • Look for a conveyancer or solicitor to help you with the legal documents required. We have a list of recommended solicitors and conveyances you can choose from.
  • Then comes the part of making an offer to buy. Try to negotiate a lower price, which is a difficult process. Ensure that all inspections of the house have been made. Whenever possible, ask for a cooling-off period.
Once your offer is accepted, you pay your deposit and you're on your way to living in your home.

Give us a call on 1300 889 743 or fill in our free assessment form to find out if you qualify for a home loan.
Otto Dargan
Mortgage Broker
P | 1300 889 743
Home Loan Experts


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