A pre-approval is the first step you should take when searching for a new home or investment, but why you ask?
It will help you determine how much you can borrow based on your current financial situation and is generally valid for 3 months. Having your finances in line prior to making offer will give you the ability to focus on properties within your price range and it gives you assurance to make a final purchase. It also shows your seriousness in making a purchase, which can help negotiations on the property with your agent.
Benefits of a pre-approval:
- Confidence to make an offer
- Know how much you can spend
- Bargaining power when you are negotiating a price
- Make obtaining formal approval a lot quicker once you secure a property
By doing a pre-approval, the bank will look at your overall profile to determine if they are likely to lend money to you. They look at your assets and liabilities, deposit, age, income, credit score and a whole range of different options to assess your profile. Based on this, they then indicate whether they are likely to lend to you, and how much they would be willing to lend.
A pre-approval is not guarantee of a formal approval, however. When you find a house and make an offer, it’s really important to make it subject to finance, as the bank does a more in depth level of assessment after you find a property, and they will also need to determine if the security is acceptable to the bank – usually done in the form of a valuation. There are other conditions you should include when making an offer, like subject to Building and Pest inspection. It is always best to consult with a Conveyancer first.
To get pre-approved today, call one of our Finance Specialists on 1300 1 borro or fill out a Contact form on our website today.