What comes first? Should you find the property first or get your pre-approved from the lender first?

It is easy to get carried away with the fun part of buying a property, looking at the house but delaying the less compelling task of arranging finance will weaken your negotiating position on both the property and the loan.

Looking for a property to purchase is an exciting time especially you are the first home buyer. Choice regarding location, size of the property, number of rooms and local amenities often see house hunters carried away in a deluge of daydreams and anticipation.

However, before you get carried away, it’s important to check off the essentials first. Although organising your finances may seem drab in comparison to perusing sales listings, gaining pre-approval with a lender will give you confidence about how much you can afford to borrow.

First, it is always good to find out if you are eligible to borrow money from a lender. Your ability to repay the loan will need to assess. You don’t want to find out after you have made an offer that your credit history, your income or your deposit is not able to help you get the loan from the lender.

Arranging finance before finding the perfect property will put you in a good position when it comes to making an offer. When you do see the house you have always wanted, you can present to the vendor and estate agent as a prepared applicant who is serious and reliable. It gives them peace of mind that your financing will not fall through. Also please don’t be afraid to let the selling agent know that you have a conditional loan approval in place.

When you have a conditional loan approval in place, it also gives you a better chance to compete with some other buyers which they still haven’t had their finance-ready.

In the instance that you find and secure the purchase of a home without having your loan pre-approved by a lender, there are a few pitfalls that you risk running into.

If you don’t have the finance to settle for your property, you run the risk of forfeiting your initial 10 per cent non-refundable deposit you need to put down to secure the property. It also depends on what state you live in, but the point is it always pays to be organised and have pre-approval in place.

Saving home loan applications to the last minute also leaves less time to find the most suitable loan and have it approved ahead of settlement.

Arranging finance as an afterthought also adds immense pressure to the process of finding the right loan and gathering the paperwork to prove you can service the loan.

The first step towards finding your dream home is speaking to Kevin Poh on 041582016 to find out how he can help you sort out your finance.