How to approach your mortgage pre-approvalThu, 21 Oct 2021
Having a mortgage pre-approval before you start house hunting gives you the confidence to make that offer and land your dream home! House hunting without a pre-approval is almost like shopping for a car without a budget. Pre-approval is the banks agreement to fund you a loan to a specified amount, armed with this, you are ready to hit the open homes and turn your dreams into a home owner reality.
So how do you go from first-home dreaming to tick of approval?
1. Analyse your current finances
To apply for pre-approval you first need to take a realistic stock of your own finances. Look at your incomings, and your outgoings. Is there money left each month? Have you been successfully saving money? Or are you relying on credit cards and after-pay to fund your lifestyle? Being realistic about the state of your financial affairs will help you know when you’re ready to take the next step.
2. Research the right home loan provider
Once you have reviewed your personal finances, look at the different types of home loans available and their features to help decide what option is right for you. You’ll need to consider if you want a fixed or variable interest rate? Whether you need an offset or redraw payment facility? This can be quite new to you, if it’s your first loan, and these great questions to ask the lender to understand how it can work best for you.
3. Complete pre-approval application with the lender
The bank will ask you to provide bank statements to support your loan application they may also need credit card statements, proof of assets such as your car and recent payslips. Your chosen lender will then come back and confirm how much you have been approved for based on their assessment.
4. Consult a mortgage broker
If you are time poor or feel overwhelmed with the application process, then consult a mortgage broker to explore all the options with you and present back the best fit. Be mindful when selecting a broker that they understand your needs and goals before they begin the process.
Remember, you may not get pre-approval the first time around, keep in mind there are many factors at play during this process and ask questions to find out what it’s going to take. Perhaps all you need to do is cut down on going out, or ask for that pay rise at work… then after 6 months you can apply again!