When you decide that you would like to buy a property, it’s difficult to know where to start. While looking at property online can be exciting and daydreaming about what you can afford can be a bit of fun, it’s only a daydream until you take the first step of getting a pre-approval for the home loan.
Pre-approval is when a mortgage broker or your bank
give you conditional approval on how much you could possibly borrow for a home
loan. To assess this, you don’t need to have a property in mind, you will only
need to answer some basic questions on your current income and expenses.
Make sure that you have your numbers as accurate as
possible as you will need to prove it later down the track to get your home
loan formally approved. Don’t try to hide anything because the truth will come
out and cause issues if you want to go ahead with the home loan.
Once you have provided the relevant information,
your home loan pre-approval provides a clear amount that you can afford to
spend on your future property. This information means you know what price range
to start looking at online and not get your heart set on a property that is
beyond your budget.
Having a pre-approval also gives a real estate
agent and the vendor of any property you’re interested in more confidence that
the sale will go through. Without a pre-approval, your offer is viewed as a
riskier option than one with it.
Keep in mind with your pre-approval that any
changes with your financial circumstances will affect the chances of a formal
approval once you find a property you wish to purchase. Major life-changing
events like job changes, reduction in hours or going out and starting your own
business will all mean getting a home loan will be more difficult and your
pre-approval is no longer valid.
Once you find a property to buy and put your offer
in, you will have to go through the process of getting your home loan formally
approved which will include providing documentation to support your claims of
income and expenses.
Getting a pre-approval shouldn’t cost anything and
from our experience, we advise going to a highly recommended mortgage broker
rather than just going to the bank you’ve always banked with. Unfortunately,
the days of banks rewarding their customers for their loyalty are long gone. To
get the best deal and to find the lender that will accommodate your particular
financial situation, a mortgage broker is the way to go.
Having said that, you need a good mortgage broker
to get the deal done. We have seen clients using a mortgage broker who have had
finance declined but then when they use a mortgage broker we recommend; the
same clients have their finance approved. If you would like to speak to one of
our recommended mortgage brokers, please do not hesitate to contact us.
P: (08) 8251 3249
E: info@spartners.com.au
