What Is Conditional Approval?
Conditional approval, pre-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 an enquiry by a lender into your financial situation ahead of time.
What is conditional approval?
The main difference when it comes to pre-approvals and conditional approvals (for Mortgage House) is that a pre-approval is awarded after the property in question has been valued and accepted as suitable for the loan by the lender. A conditional approval is awarded earlier in the process to those who haven’t found a property but want to be in a strong position as soon as they do.
Typically, a conditional approval will happen before you even begin your house hunt. The great thing about conditional approval is that a lender will be able to give you a clear picture of what your home loan situation looks like: What you can afford, what your budget should be and more.
This prevents you from getting overzealous 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. Many homeowners at auction are simply investigating the market and not actually looking to buy. Conditional approval is a great way to demonstrate that you’re not in that category.
When should you apply for conditional approval?
Applying for conditional approval demonstrates a propensity for smart planning. It’s part of a complete finance strategy when it comes to securing a property. If you like to plan ahead, you can apply for conditional approval after the following preparation has been done:
- Using financial tools, you’ve worked out your borrowing potential
- You know what monthly repayments you can afford
- You’re aware of different kinds of home loans and which one is right for you
- You have some understanding of the local property market
Is conditional approval all I need to get a home loan for a property?
If you go to auction with conditional approval, you’ll still need to gain full approval after a successful bid. That process will involve a valuation of the property you plan to purchase.
If you’re buying privately, you can still put in an offer as long as the seller allows it.
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. Talk to us about conditional approval today! The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.