It’s no secret the home buyer’s journey involves a fair amount of decision making. From choosing a location to determining the number of bedrooms, the process can be overwhelming, especially for those entering the market for the first time. This is where applying for a pre-approved loan can be of advantage – a lending option giving prospective buyers a sense of clarity in terms of what they can realistically afford.
What is a pre-approved loan?
To put it simply, getting your loan pre-approved means getting your finances arranged before you make an offer on a property, allowing you to determine exactly how much you can borrow before you buy your home.
Benefits of a pre-approved loan.
Not only does a pre-approved loan provide a level of certainty about the value of property you can buy, real estate agents actually prefer dealing with buyers who are pre-approved, giving you the upper hand against competing buyers. Plus, determining what you can afford prior to house hunting will save you the potential heartbreak of falling in love with a home that is out of your budget.
How do I apply for a pre-approved loan?
With the help of your broker, the application process for a pre-approved loan is no different to that of a regular loan. All the same documentation that would be required for a full loan application is needed and once approved, all you need to do is find your home.
Is there a downside to pre-approved loans?
There’s none, really. The Finance Agency’s Dean Nicolaou says it is a common misconception that a pre-approved loan will impact negatively on your credit score, so you should dismiss this claim. Although it may be noted on your credit file, the only perceived negative could be that the amount you are applying for is less then you thought you could borrow (although in many cases you may be surprised to know many clients find they can actually borrow more than they thought possible).
Overall, a pre-approved loan serves as an effective tool for refining your property search, particularly for first home buyers or those looking to invest. By giving you a dollar amount to work with, and the reassurance of approved finance, all that’s left is the house hunting!
If you are considering applying for a pre-approved home loan, give Dean a call on 0413 766 456 and he’d love to help you get started.