The ideal property might come along at any time, so it’s beneficial to have your finances in order.
When you’ve discovered the ideal property for yourself, what should you do next?
Despite the crisis and cheap borrowing rates, the desire for real estate in Australia has not diminished. It’s a fantastic moment to buy for many people.
As a result, it pays to be prepared. If your house loan has been pre-approved, you will be able to move quickly when the perfect property becomes available. Let’s find out why pre-approval is a good idea.
What exactly is pre-approval?
Pre-approval for a home loan practically guarantees how much you can borrow. It entails finishing the house loan application procedure before finding the home of your desires. Prepare your money ahead of time or risk losing out!
There are three vital components to pre-approval.
- The first is an income assessment to determine how much you can afford to borrow.
- The second is a credit check to ensure there is nothing concerning in your credit history.
- The third is confirmation of your deposit savings, including whatever you intend to use to help with that deposit, such as equity, a guarantor, or a First Home Owner Grant.
Why do you require it?
You don’t need pre-approval, but it does provide you with an advantage on several fronts.
It informs you of what you can borrow.
There are so many things that impact how much you can borrow. It isn’t as simple as saying, ‘you make X amount per year and therefore borrow this much.’ It might vary depending on where you reside, your spending, other loans or credit cards, and even the age of your children. Many elements that people are unaware of might have an impact on their borrowing capacity. Without pre-approval, you may not know precisely how much you can finance; you may be looking at properties in the wrong price range or risk losing on your dream house. Pre-approval provides you with additional assurance and comfort in terms of what you can afford.
Like the appearance of this contemporary five-bedroom? Are you able to afford it?
Stay away from the queue (and missing out)
The loan application response times might differ based on your lender. The danger of commencing your application procedure after you’ve found your property is that the delay in approval may cause you to lose out on other purchasers. The last thing you want to do is discover a house you like to find out that your bank took too long to approve your finances specially after the Royal Commission where the processing of Home loans have been taking up to 2 months.. From the standpoint of a borrower, a pre-approval is a lot of the work done already.
Gain an advantage over your competition.
We have discovered vendors and agents like knowing whether a potential buyer has a pre-approval in hand. It implies that you can move swiftly and that you are not making hollow promises. Pre-approval offers you an advantage over your competitors. If the property is competitive, having pre-approval means you can let the real estate agent know you are ready to go and that your offer is genuine. It strengthens your bid.
Is it true that once you have been pre-approved, you will be authorized indefinitely?
No. Pre-approval is usually only valid for 90 days. If you need to extend, it is generally quite simple. The most important thing to consider is whether your financial situation changes. If anything happens – if you lose your job or get a new credit card – it is critical to notify your lender since it may influence your pre-approval. However, depending on the modification, making the changes should not be too difficult. It may be as simple as supplying some updated documents. So, with the real estate market flourishing right now, pre-approval has never been more crucial.
So, what are you waiting for? Best wishes in your house hunting!
Since 1995, RAMS has helped hundreds of thousands of Australians realize the Great Australian Dream of owning their own home. Our national network of dedicated home loan specialists provide guidance and advice throughout the home buying journey. Find out more about our range of flexible home loan options at www.rams.com.au.