Buying a home is a big deal, and the first hurdle you will have to overcome in this process is to get a home loan pre approval. In this blog, we’ll break down what a home loan pre approval is, how it all works, and why it’s so important for anyone looking to buy a place down under.
A pre-approved home loan gives you a clearer picture of your borrowing power and helps you narrow down your search to properties you can afford. It also shows vendors and real estate agents that you’re a serious buyer, giving you a competitive edge in negotiations.
If you’re a first time home buyer or just after a better deal on your mortgage, read on to learn more.
What is a pre approval in Australia?
The lender will consider factors such as your income, credit score, and other debts to determine how much you can afford to repay each month.
A pre-approval letter from a lender is not a guarantee of a loan. But it does give you an idea of what you can afford and can be helpful in your home buying process.
Why should you get pre-approved? Benefits of getting a home loan pre approval?
When applying for self employed home loans Sunshine Coast borrowers must be aware of the higher interest rates and bigger deposit requirements that come with them.
Why should you get pre-approved? Benefits of getting a home loan pre approval
A home loan pre approval can fast track your pursuit of buying your choice of property as it:
- provides you with an estimate of how much you’re eligible to borrow, which can help you determine your budget and narrow your search to properties you can afford.
- shows that you’re a serious buyer and can increase your negotiating power with sellers and real estate agents.
- lets you focus your efforts on finding a property that meets your needs, rather than wasting time looking at properties that are outside of your budget.
- makes the loan process smoother and faster, as the lender already has a good understanding of your financial situation.
- indicates to the lender that you are serious about purchasing a home, and they may be more willing to approve your loan application.
Note that a home loan pre approval is not an iron-clad guarantee for an unconditional approval. A lender can reject your application even after you have been pre approved if the below scenarios occur during your application:
- Major life upheavals (e.g., job loss or redundancy, change of employment)
- Your property gets a negative valuation
- Government regulations change
- Lender finds inconsistencies in your documentation
How long does a pre approval take on average?
So how long does pre approval take in general? It can vary depending on several factors, including the lender, the complexity of your financial situation, and the information you provide.
On average, it can take anywhere from a few days to a week to receive a pre-approval.
The lender may need additional information or clarification before granting final approval. Pre-approvals typically have a shelf life, meaning that they are only valid for a certain period of time, usually between 3-6 months.
How to get pre approval for a home loan
- This is a straightforward process and is pretty much the same for most lenders. However, we recommend getting the help of a home loan broker for a faster turnaround.
- Provide the lender with proofs on the following information:
- Personal identification documents (e.g., Medicard, birth certificate, driver’s licence, etc)
- Income (e.g., pay stubs, tax returns, financial statements)
- Assets (e.g., investment)
- Debts (e.g., credit card information)
- Living expenses
- Genuine savings
- Shop around for different lenders and compare their rates, fees, and loan terms to find the best option for you.
- Complete the lender’s application form and provide the required financial information and documentation.
- Lastly, wait. The lender will evaluate your financial situation and provide you with a pre-approval letter if you’re eligible.
- Provide the lender with proofs on the following information:
Discuss your options with a Sunshine Coast mortgage broker
Move forward with confidence when shopping for a home with a home loan pre approval. When you’re ready, don’t hesitate to reach out to our team at Sunshine Coast Financial Solutions.
Our mortgage brokers are here to help you navigate the home loan process and discuss your options. With our expertise and guidance, you will get access to a panel of lenders who can give you a more favourable outcome for your personal circumstances.
Meet Chris Wilson, the heart of Sunshine Coast Financial Solutions (SCFS). With over a decade of experience in finance, Chris started his journey as a broker with Aussie Home Loans in 2009. His dedication earned him the title of Rookie of the Year in 2010. By 2011, he was ready to build a business based on trust and strong partnerships.
