I understand there are people out their who go through open homes just for fun. Generally opens to me are dead boring, that is unless i’m about to buy. As a serious home buyer you need to start with a finance pre-approval. Here’s why:
- You’ll know exactly how much you can spend
- You’ll know what your repayments will be
- Knowing your limits allows you to negotiate confidently
- Your final loan will be organised faster
- There’s usually no cost to you
- Allows greater confidence to buy at auction
- Ensures you’re not rushed into selecting a loan after purchasing.
With the banks changing lending criteria and how they view loan serviceability, it’s more important than ever to be prepared.
Nothing sadder than finding the house of your dreams and then not getting your finance in order in time to be able to buy it.
Get a broker
Use a good broker, that way you maximise your options with lots of different lenders and products to choose from. Your broker will ask about your property goals, including your time frame to purchase and what you intend to use the property for. They should be gaining an understanding of what you are comfortable in repaying. Then the broker will identify loan options and products suited to you. This might even mean negotiating to get you a better deal.
When you’ve decided on a loan product the broker will complete all the paperwork. In as short as a week, a you can have your pre-approval. If you want to know what to expect from your broker follow this link.
What does a Pre-Approval really mean?
Frustratingly, if you go to a bank and they say you can get a loan, you may not actually be pre-approved – you may just be pre-qualified.
I would suggest you get an actual pre-approval, this involves the lender actually going through the process of assessing your situation and verifying your details.
Your pre-approval will tell you the maximum purchase price you can buy up to as well as a number of conditions that will apply for the bank to lend you your funds. You can expect the bank to outline any conditions which are likely to apply such as:
- subject to a valuation.
- maximum loan to value ratio,
- whether lenders mortgage insurance would apply
If your personal circumstances change, such as losing a job, between the time of obtaining the pre-approval and when you purchase your property, the bank has a right to reassess your position based on your new circumstances.
How long is a pre-approval valid for?
Pre-approval lengths differ from lender-to-lender but but most pre-approvals last about 3 months. If your pre-approval expires your mortgage broker can easily apply to extend the pre-approval or easily resubmit an application if necessary. There is no cost for this.
When submitting an application for pre approval there are documents the lender and your broker will require to prepare and review your application.
Documents generally required as a minimum:
Identification documents: Drivers Licence & Passport or Birth Certificate.
Evidence of Income: Last 2 payslips Plus last Payment Summary (Group Certificate). If you are self employed you will need to provide last 2 years tax returns and financials for personal and company if applicable.
Evidence of your contributions, savings statements covering past 3 months.
There is likely to be some additional documents required based on lender and your circumstances.
If you would like to arrange your pre-approval or for additional questions contact me on 03 9078 8485, email email@example.com or you can arrange a time to discuss further here.