Understanding Home Loan Pre-Approvals and Making it Work For You

  • Posted 07 Mar

Understanding Home Loan Pre-Approvals and Making it Work For You

You’re reading to make the leap into buying your first home and you’re excited. You’ve been planning for this for a while and you’re ready.

You’ve even looked at how much your can borrow and you feel assured that you know what you’re in for.

But, did you know that your smartest step forward is to get a loan pre-approved?

If you didn’t, read on to learn what you should know when it comes to getting a home loan pre-approved and how to make it work for you.



What is a Pre-Approved Loan?


In simple terms, it’s a conditional lending agreement between you and a lending institution that tells you exactly how much they will lend to you for a home.

Once you have this agreement in place, you can be confident that you know how much you can borrow and get on with finding the right home. There is no question about whether you can afford this home or that home, because you already know what you can borrow and what your maximum monthly repayments will be.

So now that we know what a pre-approved loan is, here’s a few more things you need to know before you get your pre-approval in place.



Get things moving:


By having a pre-approved amount in place, it means that if you find a house that meets your borrowing capacity, the final application will move a lot quicker.

It’s important to note that your pre-approval is conditional on finding the right property and that there is a time limit on how long this pre-approval is in place, normally 90 days. This means that you should be fairly confident that you’ll find a property that meets your needs within this time frame.



Seal the deal faster:


If you’ve got pre-approval, it can make the whole home shopping experience a lot easier. You’ll find that you can move to an unconditional status a lot quicker before your settlement date, which means less stress and a quicker take over date.



Keeping it real:


By having pre-approval in place prior to going house hunting, you know exactly what you can afford to buy and what you can’t.

It allows you to understand your budget constraints and be realistic with what you can and can’t afford, removing the possibility of overcommitting right out of the equation.

Pre-approval is perfect for first home buyers, because it removes all the uncertainty because you know exactly how much you can borrow and what you’re likely monthly repayments would be based on this amount.

Getting pre-approval as a first home buyer just makes good sense. Why would you venture out into the home buying market without first knowing what you can borrow and what your monthly repayments will be?

Just remember, every time you submit a pre-approval application, it does get recorded against your credit history. This is why you should always work with a mortgage broker, as they’ll identify the best lender for you without affecting your credit history.

Are you ready to take the leap? Contact the team at Australian Credit and Finance today to get your pre-approval application underway.

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