Starting the home ownership journey can feel exciting and daunting all at the same time. There’s so much to learn and new terms to wrap your head around. One way to prepare is to get pre-approval (or conditional approval as it’s sometimes called) so you’re ready to go when you find the home of your dreams.
We’ve answered six of the most common questions when it comes to getting pre-approvals to help you on your journey.
1. What does pre-approval mean?
Pre-approval means a home loan lender has agreed, in principle, to lend you money to purchase a home, however this isn’t the final approval to proceed. It’s basically the lender letting you know you’re OK to apply for a loan and how much you can afford so you have the confidence to put offers on homes when you’re ready. You aren’t obliged to go ahead with the lender you receive the pre-approval through.
You might want to use this time to find out how much you need to save for a house deposit. This will usually be between at least five to 20 per cent of the property value, however factors such as your income, credit score and savings can influence the final amount. To help get you started, check out our Home Loan Borrowing Power Calculator.
2. Do I need pre-approval?
If you want to be organised before you view properties you are interested in, make sure you get your pre-approval sorted beforehand. It’s a great way to get an idea of how much you can spend so you can refine your property search and it will also mean you’re a step ahead when it comes to putting in an offer.
In a fast-moving property market, real estate agents will often require a pre-approval for you to make your offer as it gives confidence to the seller when reviewing multiple offers.
- property value estimate
- comparable sales in the area
- suburb performance
- local school zones and more.
Get your free property report.
3. How do I get pre-approval?
For us to complete a pre-approval for you, we need to fully understand your financial situation. When you meet with us, please bring all your relevant documents and personal information as guided by your home loan specialist so we can make sure you receive an accurate pre-approval.
4. How long does a home loan pre-approval last?
A home loan pre-approval lasts 90 days. This generally gives you long enough to find your new home and have an offer accepted.
5. Will I definitely be able to borrow the amount that I receive pre-approval for?
A pre-approval isn’t a guarantee that you can definitely borrow the amount the lender has given you pre-approval for and you should never sign a contract or assume your finance will be approved until you receive formal approval from a lender.
By providing a strong snapshot of your financial situation when applying for a pre-approval, you’ll hopefully be in a better position to understand approximately how much you may be able to borrow.
6. What is the home loan approval process?
Typically, most home buyers in WA would use a 21-day finance clause and loans would be approved during this time, depending on the complexity of the loan. This allows for a valuation of the property if required and confirmation of all required documentation.
If it’s your first home loan, it’s worth seeking some professional advice to get an idea of your borrowing power and how much you can afford.
We're here to help, so if you’re ready to take the next step in your home buying journey or would like more information, please call one of our Home Loan Specialists on 13 25 77, or get in touch with one of our Mobile Home Loan Specialists who can come to you any time.