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Getting your mortgage pre-approval right – from start to finish

So, you’ve got your deposit together and you’re rearing to start house-hunting. But first, you may be thinking about getting a home loan – and there’s no better way to get a home loan than to start with pre-approval.

To help you make the most of this process, let’s break down the key points of what’s involved from start to finish.

Why you need a pre-approval

Applying for pre-approval can help to cut down stress and organising time, as you’ll be able to know how much you can afford to borrow and the price range for your search. That way, you’ll have a good idea of your available resources before making an offer.

Verifying information

When you first contact a mortgage adviser like us, we will help you to choose a lender for your finances and situation. After that, we will begin the application with you. This is when you should provide us with all the information we need about your financial situation or history.

You’ll also need to provide suitable documentation where necessary; we will help you make sure that all necessary information is included to save you the extra worry.

The right property

Pre-approvals are usually subject to the lender finding the property type and valuation or purchase price acceptable. The exact conditions for a pre-approval can vary through different providers, so be sure to read and understand what the fine print entails – or get in touch with us if you’d like to walk through it with an expert.

These conditions mean it’s important to have your finance sorted before making an offer, and even more so when buying at auction as auctions are usually unconditional sales. If you are the winning bidder, you are legally bound to go ahead with the purchase, so don’t forget to confirm your finance in the lead-up to auction day.

Avoid being caught by surprise

The pre-approval amount that your lender sets is a non-negotiable figure – usually, the maximum that they will offer based on the personal info you have provided. However, what you end up able to borrow may be less. Again, this will be subject to the property type and sometimes the location of the property (for instance, you can generally borrow less against an apartment than you can against a residential freehold property).

The pre-approval is more of a formal indication than an outright promise, so try to keep this in mind while searching for your first home.

Pre-approval period

Most pre-approvals won’t last forever; they might only be valid for a period of three months and then a full application may be required again, or at least you may be required to provide updated information to support your application. Be aware of when your pre-approval period expires, and if you don’t think you will find a house in that time, apply for a new pre-approval in plenty of time so there’s no interruption to your house hunting.

You’re not chained to the full amount

It may seem tempting to go for the best, most expensive house possible when you get your approved amount – but it’s always vital to look at the bigger picture. Is the total figure something you could reasonably pay back with interest? If not, it may be worth looking for properties that come in under that amount; after all, you’re under no obligation to spend every cent.

For example, if you get a $700,000 pre-approval, that doesn’t mean you have to buy a house for $700,000 plus your deposit – so make smart decisions that take future repayments into account.

We are here to help

Buying a house is always exciting, and it’s even more so with the security of a pre-approval in hand. Just make sure you provide all the correct info and understand any conditions of the pre-approval, especially those that might impact on the type of house you want or what the final approval amount might be.

As mortgage advisers, we’re here to help you through every step of the way – from connecting you with the best lenders to answering any questions you may have during the process. Give us a call today – we’d love to hear from you and be a part of this exciting journey.


Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current development or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek advice from a financial adviser.

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