WHAT IS PRE-APPROVAL AND WHY IT MATTERS
Have you ever left the house without first checking the weather forecast? Confident that you know how the day will turn out, you pop on a pair of shorts and a t-shirt and head out. Soon, the weather takes an unexpected turn for the worse and you’re sat shivering in the corner with nothing but a serviette to cower under.
Beginning your house hunting without first acquiring pre-approval on a home loan is similar to this – only much worse. The feeling of not having enough cover from your home loan will leave you exposed to the chilling element of bitter disappointment.
What is Pre-approval?
Financial institutions provide a pre-approval facility that allows consumers the opportunity to discover what they can truly afford. Consumers can either apply at banks directly and do all the leg work themselves, or they can work through a bond originator like BetterBond who will do the checks for you for free and will provide the pre-approval certificate within 24 hours.
The whole process is really quite simple. To apply for pre-approval, all you need is your latest payslip, three months’ worth of bank statements, and a copy of your ID. Once issued, the pre-qualification will state the bond amount, interest rate and instalment amount for which you qualify. However, buyers should be cautioned that these amounts are only 100% finalised after the bank has completed a property valuation and has received a signed Offer to Purchase on the property in question.
Why does it matter?
While acquiring pre-bond approval might seem like an unnecessary item of admin that you simply do not have the time for, buyers are regularly surprised by what they thought they could afford and what the banks would grant them when it finally reached that point in the process.
The various online affordability calculators do a great job for providing buyers with a rough idea of what they could afford, but they by no means guarantee a loan amount. For that kind of assurance, financial institutions would first need to run a number of credit and background checks before they could grant you an amount.
Not only will having a pre-approval certificate provide you with the assurance you need to begin your property hunt without any trepidation, but it also lets sellers know that you are a serious buyer. This often makes them more willing to work around your schedule when coming for viewings.
But, by far the most important advantage is that, should it come to the point where more than one buyer has put in an offer, the pre-approval will boost the chances of your offer being the one that is accepted.
Don’t let your dream slip through your fingers. Apply for pre-approval by CLICKING HERE.