Can Getting a Home Loan Pre-Approval Boost Your Buying Power?
When you’re house hunting, it can get pretty competitive. With multiple potential buyers vying for the same property, walking in with a home loan pre-approval in place could make all the difference between you getting the property of your dreams and missing out.
What is a home loan pre-approval?
Pre-approval, conditional approval, and approval-in-principle are all terms that, essentially, describe the same thing. It can be a little bit confusing since all three terms will mean slightly different things to different lenders.
But in essence, these three terms are used to describe a bank or lender agreeing in principle to provide you with a home loan at an early stage in your home-buying process.
Before you get a final approval, your application will be fully assessed once you have submitted all the required documents to support your application like proof of income, savings and other debts you may have.
Pre-approvals normally last for up to 90 days and have various conditions attached so it’s best to check with your lender.
It isn’t a guarantee that the home loan will be funded, as once you’ve found a property you’ll still need to complete a full application which requires final unconditional approval by your lender.
You have a clear idea of your borrowing power
When you go through the pre-approval process, the lender will help you to figure out how much you can realistically afford to borrow. Knowing this early in the process could help you narrow down your house search.
You can confidently make an offer
Because you’ve already done your prep work with a pre-approval, you can act quickly and make an offer when you find the property you like. Any offer would need to be subject to finance final approval.
Most of the paperwork is completed upfront
The good news is that most of the supporting documentation required in the pre-approval application is the same for the full application. Because you’ve done all the paperwork upfront it saves you time.
Pre-approval costs can be refunded when you settle your loan
When you apply for a home loan pre-approval you’re under no obligation to actually take out the loan. Pre-approvals are valid for 90 days, and can easily be renewed.
Getting a pre-approval prevents you from going overboard and house-hunting way outside of your budget. But in addition to that, conditional approval shows agents, vendors and lenders that you’re a serious prospect.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage. We can also help you get a free quote for a Certificate of Currency from our partner Allianz.