Who needs the frustration or has the time and energy to waste searching for the perfect dream home only to find out that their ability to borrow leaves them well short of the purchase price?
Unfortunately, in the current economic environment and tighter credit policy regime many potential home owners are finding themselves caught short when it comes to the amount they can borrow from banks and lenders.
However, the solution to ensuring your dreams of home-ownership are not shattered can be easily addressed by asking your mortgage broker to help you apply for a conditional pre-approved home loan.
Based on your current financial circumstances your mortgage broker can apply on your behalf to a lender for a conditional pre-approved home loan. This will provide you with a good indication of how much you can borrow before you commence the search for your new home.
By meeting with your mortgage broker and supplying some preliminary documentation the process of applying for conditional pre-approved home loan is a relatively painless process. Most importantly it provides you with peace of mind in your search for the right property for your financial situation.
How does conditional pre-approval work?
A conditional pre-approval is an indication from a lender that you’re eligible to apply for a home loan up to a certain limit. It’s based on your current financial situation.
You’re not under any obligation to take the loan, and the lender has no obligation to lend you that amount, but it does show sellers you’re serious about buying and that you’re confident you can afford the property.
A conditional pre-approval can also help you with being well progressed with your application for finance so that you don’t miss out on snapping up your choice of property when the time is right.
What are the advantages of conditional pre-approval?
If you’re early on in your home buying journey, getting conditional pre-approval can help you focus your property search by giving you a clear idea of what you’re likely to be able to afford based on what a lender is prepared to loan you.
Depending on the lender, pre-approvals expire between 3 – 6 months. If something changes during this time whilst you’re looking for a new home – your financial situation, for example – you can always ask your mortgage broker to review or renew your conditional pre-approval.
Conditional pre-approvals offer several main benefits when you are house hunting:
- Conditional pre-approval means you can go from open houses and inspections knowing exactly how much you can afford to spend, so you won’t waste time looking at homes you can’t afford.
- Secondly, conditional pre-approval puts you in the position to negotiate the best price. It gives you the ability to make a serious offer on a home on the spot, as both you and the home’s owners can be sure you’re the real deal.
- Finally, it takes away the headache of having to search out and reconsider a whole bunch of different loans every time you find a property you want to make an offer on. After all, it is not uncommon to have to make an offer on several homes before being successful.
Further more, with a conditional pre-approved home loan in place, there are fewer chances of hiccups during the sale process. In some cases, sellers may even accept an offer below the listed price and take the property off the market with confidence in knowing that you are a serious buyer.
If you decide to make an offer on a home with a conditional pre-approval in place, you’ll be able to move quickly having had your finance partially sorted beforehand.
A conditional pre-approval is by no means compulsory. If you’ve found your dream home and the right loan product for your needs, you can ask your mortgage broker to go right ahead and apply directly to a bank without asking for pre-approval. However, if you are still searching for the right property, pre-approval is a very useful tool to have.
By meeting with your mortgage broker and taking the time to get organised and prepare yourself financially – finding your dream home will be a positive and pleasant experience rather than a negative one.
If you would like to arrange a ‘conditional pre-approved home loan’ so that you know exactly how much you can afford to spend on purchasing your dream home just call our office on 1300 888 299 or send us and email.
General Advice Warning: This blog is not designed to replace professional advice. It has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice, in light of your own objectives, financial situation or needs before making any decision as to whether this scheme is appropriate for you.