After months of scouring the housing market, you have finally found your dream home or ideal investment property. The estate agent tells you there are two other couples interested in buying the property and it would be wise to lay an offer on the table.
You quickly contact your bank and soon find out they won’t lend you as much as you need and so your dream home starts to slip away from you.
Unfortunately, this occurs all too often for many would-be home buyers. But it is a situation that can be easily avoided with the help of a pre-approved loan.
What is a pre-approval?
Pre-approved finance, is a bank indicating that they are prepared to lend the amount requested, in the scenario presented to them, subject to the applicant finding a suitable property and valuation of that property. It is not a rock-solid guarantee that the bank will lend you money, but it is a strong indication.
What are the benefits?
Organising a pre-approval loan before you purchase has a number of benefits. It will give you the knowledge about how much banks are willing to lend you and in turn will provide you with a sense of comfort in knowing how much you should be spending on purchasing a property.
When bidding at auction that confidence could be the difference between losing out on your dream purchase and being the one to sign the contract. It also gives you the option to make an offer on a property and take it off the market prior to it going to auction.
Already having the cash at your fingertips also gives you significant bargaining power. In most instances, vendors are looking to achieve a swift and simple sale and knowing you can provide a fast settlement may entice them to knock a little off their asking price.
How do you obtain pre-approved finance?
It’s actually quite simple.
You’ll need to provide the following supporting documents:
– payslips and tax assessment notices (to show income)
– bank statements (to show savings)
– credit cards statements (and any other debts)
-Copies of passport and Driver’s licence
From this, a general assessment of your current financial situation and borrowing capacity will be calculated and an appropriate application will be submitted for pre-approval. The entire process can be quite quick, with some lenders offering approval within days.
Once confirmed, your pre-approval will last for up to three months, ensuring you have plenty of time to shop for your dream home.
The value of using a broker
No two banks are identical. Policies and products differ from lender to lender. One bank may not lend to you based on your present circumstances, while another will. Furthermore, the maximum amount they will lend you will also vary between banks.
Brokers know how to navigate these turbulent waters and get you ready to buy. They save you time and the hassle by doing the shopping around for you. Unlike the banks, they will be able to show you different options with different lenders and tailor a loan to best suit your situation.
At hatch we simplify this process and explain everything you need to know. We’ll guide you along the way, take care of all the unnecessary stress and paperwork involved! If you are interested in obtaining pre-approval, give us a call today on 1300 442 824.