If you are thinking about buying a home, then the first thing you need to do is seek a loan. However, there is another step even before this – pre-approval.
It can be difficult, so here are a few tips of the trade that can help you finance your home.
First of all, let’s understand what pre-approval is
This is when you go into your lender and discuss the certain amount that you would want to borrow. The lender will assess your income, credit history and if you are of any risk to the bank.
Phone bills, previous mortgages, and even library fines can stand between you and pre-approval – even those of your partner. That’s why you should deal with outstanding debts before you get going. On top of this, you’ll need to bring extensive documentation proving your income and financial stability. It pays to be prepared.
Why the need for a pre-approval loan?
Plain and simple, pre-approval puts you in a better position to buy property.
It shows vendors and their agents that you mean business, gives you a firm budget and instils confidence that now is the right time to buy real estate. Some transactions will actually require pre-approval – for example, certain auction sales. If you walk into an auction prepared and ready to make an offer, then it can separate you from the rest of the other potential buyers.
Getting pre-approval means you’re not leaving anything to chance – and with so much at stake, why would you?
Benefits of pre-approval
Aside from peace of mind and buying confidence, pre-approval on a home loan gives you something concrete. You will know your lower and upper borrowing limit, as well as what your approximate repayments will be.
Buying real estate with a home loan can seem intangible until the deal is done, at which point you surprise yourself with the sheer magnitude of the costs. Pre-approval ensures both you and your lender understand exactly what you’re getting into.
You don’t have to wait around and shuffle paperwork if you see a house that you love and want to buy it. Pre-approval will get you ahead of the game in the tight property market. Talk to the fantastic team at Border Bank to talk about your home loan needs.