What is Home loan pre-approval?

Pre-approval is a lender’s assessment of your ability to service a loan by looking into your income, employment type, living expenses, liabilities, credit history and how often you have moved home or how often have you change the job in the recent past.

Normally pre-approval is done prior to the property being found and chosen and pre-approval normally doesn’t take into account for particulars of a specific property and valuation, which is why uncertainties can arise.

Pre-approval is very useful for borrower who want to know how much they can borrow before attending open homes and can be reassuring for first home buyer.

Pre-approvals for major lenders usually is valid for up to 90 days, some of the pre-approval may be renewed to allow extra time to find a property by providing latest supporting documents such as payslip.

Please be aware that the pre-approval is not a guaranteed loan. This is a lender’s way of telling people that how much they expect to lend you based on the current lender policy and your pre-approval circumstances.

The things normally cause a lender to decline an application after pre-approval is the borrower got another credit card or car lease or any other debt that will affect their income and mortgage serviceability.

Pre-approval usually be conditional on a property valuation. If lender doesn’t not deem the property a marketable asset, they may not approve the mortgage.

Potential lenders need to be wary of the changes that can affect their ability to take out a loan, regardless of pre-approval figures, to ensure they don’t overcommit without a guaranteed source of funding.

Pre-approval is not a guarantee, but is a very useful tool for anyone looking for a property. If you haven’t had your pre-approval, the next step is to speak to Kevin on 0415820016 about pre-approval before you lock in your Saturday open home schedule.