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 changed your job in the recent past.

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

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

Pre-approvals from major lenders usually are valid for up to 90 days. Some pre-approvals may be renewed to allow extra time to find a property by providing latest supporting documents such as payslips.

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.

Things that normally cause a lender to decline an application after pre-approval is when a borrower incurs a new debt such as a credit card or car lease that can affect expenses and mortgage serviceability.

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

Borrowers 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.

Disclaimer: We recommend that you seek independent financial and taxation advice before acting on any information in this newsletter. It contains general information only and has been prepared without considering your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. Interest rates are subject to change without notice. Lenders terms, conditions, fees & charges apply.