How to Protect Yourself When Buying a House
The process of purchasing property, whether it’s your first home or second, is never totally stress-free. But there is one crucial step you can take to safeguard yourself and eliminate a lot of that stress. The best piece of advice you will ever receive and should always follow is to use conditional and pre-approvals from a lender to best aid your home loan application and property purchase. Conditional approval A conditional approval means a lender has assessed your financial situation and the estimated loan amount they propose for you could be formally approved once you find a property. You can use conditional approval to gain clarity on what financial backing you can expect to achieve and let agents, sellers and auctioneers that you are a serious buyer. Knowing in advance how much you can borrow helps you twofold. You can save a lot of time, narrowing down your house search to areas and properties within your budget. You can also work out how much your loan repayments will be weekly, fortnightly or monthly to ensure that you’re not stretching your budget and compromising on having a comfortable lifestyle. Getting a conditional approval before house-hunting will give you the advantage of speed to act when the right property comes along, giving you the upper hand over other buyers. Pre-approval Pre-approval is the confirmation from Mortgage House that, now that the property you wish to purchase has been valued and we have all required information from you, provided final checks are completed successfully, you can proceed with our financial backing.You can use pre-approval to that you’ve had valuated and approved by your lender. Going ahead and committing to buy a property without a pre-approval could be risky, because what if the lender rejects your loan amount request? Putting a conditional offer down on a property with the security of pre-approval means that as long as your final checks are completed successfully, then the sale will go through smoothly. With most homes in NSW going under the hammer at auctions, you would need to put down a deposit straight away if you win, and there is no cooling off period. If you do that and then can’t complete the purchase, you would lose your deposit. You may also be held accountable for losses suffered by the seller, leaving you more out of pocket. You can apply online for a loan pre-approval or conditional approval by filling in all your details, including your assets and liabilities. This is an initial assessment only and to fast track your application it’s best to submit the relevant documents required to get an unconditional approval. The good news is that most of the supporting documentation required for the pre-approval application is the same for the full application. Because you’ve done all the paperwork up front, it saves you time. Both conditional approvals and pre-approvals are valid for 90 days from issue. For pre-approvals, the lender will also need to accept the property you’re buying. To reduce the risk of them rejecting the property, email your lending specialist the link to the property listing in advance. The main delay for getting a loan approved is not having all the required documents ready for your application. Providing everything immediately can get you a faster approval. Mortgage House At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one. But don’t worry, we can help with that. If you’re thinking of buying a home, you can apply online for a pre-approval or contact us for information about the best options for you when it comes to your mortgage.
Can Getting a Home Loan Pre-Approval Boost Your Buying Power?
When you’re house hunting, it can get pretty competitive. With multiple potential buyers vying for the same property, walking in with a home loan pre-approval in place could make all the difference between you getting the property of your dreams and missing out. What is a home loan pre-approval? Pre-approval, conditional approval, and approval-in-principle are all terms that, essentially, describe the same thing. It can be a little bit confusing since all three terms will mean slightly different things to different lenders. In essence, these three terms are used to describe a bank or lender agreeing in principle to provide you with a home loan at an early stage in your home-buying process. Neither are a guarantee that the home loan will be funded: conditional approvals are given when an applicant is yet to find the property they want to purchase, and pre-approvals are given to those who have had their chosen property valued. Both require further assessments before being formally approved. Before you get a final approval, your application will be fully assessed once you have submitted all the required documents to support your application like proof of income, savings and other debts you may have. Conditional approvals and pre-approvals normally last for up to 90 days and have various conditions attached, so it’s best to check with your lender. You have a clear idea of your borrowing power When you go through the conditional approval process, the lender will help you to figure out how much you can realistically afford to borrow. Knowing this early in the process could help you narrow down your house search. You can confidently make an offer Because you’ve already done your prep work with conditional approval, you can act quickly and make an offer when you find the property you like. Any offer would need to be subject to finance final approval. Most of the paperwork is completed upfront The good news is that most of the supporting documentation required in the pre-approval application is the same for the full application. Because you’ve done all the paperwork upfront it saves you time. No-obligations? When you apply for a home loan conditional or pre-approval you’re under no obligation to actually take out the loan. Pre-approvals are valid for 90 days and can easily be renewed. It’s important to be aware that a credit check will be conducted for conditional and pre-approvals, and multiple credit checks can do damage to your credit score. Getting a conditional approval prevents you from going overboard and house-hunting way outside of your budget. But in addition to that, conditional approval shows agents, vendors and lenders that you’re a serious prospect. Mortgage House At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one. But don’t worry, we can help with that. If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage.