Helpful Information

Tuesday, 06 December 2016 23:42

Pre-Approvals Explained

Pre-approval Pre-approval

Pre-Approvals Explained

 

Before looking for a house, many home buyers prefer a pre-approval in place first so they can enter into a contract with more confidence knowing how much they can afford and what the loan repayments will be.  A pre-approval is actually a full loan application with the Lender of choice, but without a nominated property; thus giving the Lender a full overview of the customers' background and profile.

Is a Pre-Approval Guaranteed?

Surprisingly not always. If your personal circumstances don’t change, all good and you will rarely run into any issues as a borrower; however, the property you’re purchasing could have an unexpected issue arise.  Once you have located a property and requested your pre-approval to be turned into a formal home loan approval, the Lender will then order a valuation of the property to confirm if it will be satisfactory security for your proposed home loan.  If the property isn’t valued at the same price as you are paying or if there are issues revealed with the property that are adverse to the Lender’s security, then the Lender may not proceed with a loan on that particular property. However, it is better you didn’t purchase that property anyway and the Lender has done you a favour as you don’t want  those  issues  to become your issues as that home owner. So then if that happened, you just look for another property with your pre-approval still intact.

How long does a Pre-Approval last?

This varies from Lender-to-Lender, but generally a pre-approval is valid for 3 months.  Most Lenders will extend that on request.

Will I need to provide payslips etc.?

In order to get a pre-approval, you provide the Lender all their standard required documents: Driver Licences, payslips, bank statements etc.  Once you have entered into a purchase contract, you sometimes  need to update those things as your payslips and bank balance statements have become out of date (more than 30 days old), and also to evidence your situation has not changed (e.g. employment, or taken on any new liabilities).

Does a Pre-Approval cost anything?

Not at all.  A home loan “pre-approval” is offered by most Lenders as it smooths the way for both you and them in your home purchase.

How long does it take?

Depending on the time of year, and the Lender of choice, it can be anywhere between 1 and 8 business days.

How do I get a pre-approval?

Always call a Mortgage Broker.  They guide you through the whole process and make it easy for you to understand. They will advise you which Lender is most suited to your circumstances and which type of home loan will meet your needs. Their services are free to you as the Lenders pay them for processing home loan applications.

More in this category: « A Breakdown of Upfront Costs

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Whether you are looking to purchase your first home, renovate, refinance or invest, we’re here to negotiate the right finance for you. We’re a one-stop shop with hundreds of loan options available from across Australia’s leading lenders and we’ll work with you to find the right finance solution to meet your needs

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Contact Gladstone Home Loans directly on:

Phone: (07) 4978 7422
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Fax:
  (07) 4978 7433
Email: [email protected]

Visit our office at:
63 Aramac Drive
Gladstone, QLD 4680

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