Before you start looking for your perfect home, it is important to find out how much you borrow and what type of loan is suitable for your needs. Securing a pre-approval for a home loan gives you confidence, as you will know what your spending limit is. It also demonstrates that you are a serious buyer - that you have done your homework and are ready to proceed with a purchase.
The process of getting pre-approved can take some time, so it is important that you allow enough lead time with your house hunting. The good news is that the pre-approval requirements are similar to an actual home loan application, so doing a pre-approval will reduce the time and effort required when it comes to the formal application process. You’ll need to provide:
Once your pre-approval is secured, you are then free to look for a house knowing your limit and armed with extra negotiating power. Once you’ve found the house the (realistic) house of your dreams, you’ll then need to get formal approval from your lender.
A pre-approval is not a guarantee of finance, rather it is an indication from the lender that they have assessed your credit worthiness.
Once you have secured a property, the unconditional approval is a new process. There are always a number of conditions that a lender will place on a pre-approval such as:
There is a huge upside to getting a pre-approval
Once you've bought your property, a pre-approval makes the formal application much more straightforward, as most of the hard work has been done.