Do you really need a pre-approval? Or is it all a waste of time? In this lesson, we explain the differences between the pre-approvals on the market and share with you, our recommendations.
Summary of Key Points
– A pre-approval is a preliminary home loan approval
– Enables your to start searching for property more seriously
– You can put an offer on a property or bid at an auction
– Valid for three months
– Make sure that your pre-approval is ‘fully assessed’
– Pre-approvals are always indicative and subject to change
Did you know?
Did you know “strengths” is the longest word in the English language with one vowel?
According to the Guinness Book of World Records, “strengths” is the longest word in the English language with one vowel. The word contains nine letters, eight of them being consonants.
Prefer reading? Here is a transcript of the video;
Hello and Welcome. This is Paul Pappas from Mortgage Choice. So you’ve decided to purchase your property, you’ve done your numbers, you know your budget, and you know how much you can borrow. You want to formalise the next step in terms of buying your first property. That next step, of course, is a pre-approval.
What is a pre-approval? A pre-approval effectively is a preliminary home loan approval that will allow you to place you in a situation where you can purchase a property if the right property comes up. It allows you to commence your search with the confidence of knowing exactly what your numbers are in terms of how much you can spend and how much you can borrow.
If the right property comes up, you can move accordingly. So really, what it allows you to do is I call it a ‘fishing license’, and it lines your pockets with a budget to know exactly what you can borrow and then spend on a property. It allows you to make an offer on a property and make negotiations on a property if you find the right property and gives you the confidence of knowing that you can also bid at auction if required. Please do talk to us about what you do find a property in terms of you know whether you’re in the right situation and position I should say to negotiate whether that’s a property by being sold at auction or private treaty, but you know to start negotiating property make sure that your pre-approval ticks all the boxes of what you’re looking at doing.
It’s valid for 3 months by law, unfortunately no longer, and needs to be reviewed after that to make sure that your situation hasn’t changed after that 3 month period. Please make sure that your pre-approval is fully assessed, and this is a very, very important point because what we’re finding now the of the more recent times is that most banks and a lot of lenders are only issuing what’s called desktop, computerised, verbal, call it, whatever you like types of pre-approvals, and to me, that’s very dangerous because like I said before a pre-approval allows you to purchase a property and potentially sign a contract. If you’re looking at signing a contract on a property for whatever, you know a significant amount of money that you’re looking to spend for the very first time, your pre-approval needs to be fully assessed, and that’s the only pre-approval that we will arrange for our clients.
Now, what do I mean by fully assessed pre-approval? I’m talking about reviewing your income documents, your payslips, your bank statements, and your expenditure by your credit cards or other loan facilities that you might have to make sure that you qualify for a loan and give you a proper, fully assessed pre-approval. So, in other words, it’s exactly the same documentation that is required for you to a loan approval once you buy property. So without a fully assessed pre-approval, how do you really know that you are going to get the loan approval that you’re expecting?
If it’s only a desktop or a verbal or computer-generated pre-approval because the bank’s interpretation of your numbers or your situation could be very different once they see the numbers. So very important and critical that you obtain a fully assessed pre-approval before you start site or negotiating on properties or even bidding at an auction.
A pre-approval is always indicative and subject to change, and we are seeing some changes in the lending environment in terms of you know not only interest rates but the lender’s conditions in terms of their assessment and qualification criteria for assessing loans.
Again it’s important to be talking to us through the whole process to make sure that your pre-approval is still valid and that you know we can obtain a formal loan approval based on your same situation. It is a very good indication but subjects to change.
As always look, please talk to us in relation to obtaining your pre-approval, make sure it works for you and make sure that it is a fully assessed pre-approval. Our contact details are here for you. Thank you for attending!
Why not reach out to our office so we can speak about your individual circumstances!
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