What is Conditional Approval?
Since the pandemic started, Australia’s homebuying industry has been somewhat stilted, but it is beginning to bounce back. If you intend to join in the competition in finding a home, it’s a good idea to get conditional approval before you’ve decided what kind of property you’d like to buy.
Conditional approval is a formal indication from a financial institution that they will be prepared to loan you when you purchase a property. They’ll start by assessing your financial situation and then go through the process to let you know what they’ll be willing to give you.
Conditional approvals specifically look at your income, expenses, employment, savings, expected deposit amount, any existing debt, and your ideal price range compared to what you can afford.
Keep in mind, conditional approval is not a formal promise or guarantee for the loan that you still need to apply for, but it helps when you’re out house hunting. You’ll be better able to approach sellers with a price range so they’ll know to take you seriously.
In the end, lenders will appraise the property to make sure it’s worth the amount you’re hoping to borrow. They’ll only lend you what they feel the property is worth regardless of what may have been in your conditional approval.