Pre-approval: a property buyers’ asset
When you buy property, there are some things that can make the process easier and some things that can make the process more difficult. By having some things in order first, you can have some distinctive advantages to your purchasing game. One of them, is mortgage pre-approval.
Pre-approval for a mortgage is when a lender has actually checked your credit and verified your documentation to approve a specific loan amount for a specified time period (often 90 days). All that is left to do when you find a property you wish to buy is apply it to a property and receive final loan approval. These are still subject to terms and conditions but can also be highly valuable for first home buyers and investors. Why? We’ll explain…
You know what your limitations are
Too often with the banks tightening lending (especially for investors) what someone thinks they can afford, might be different to what they can actually afford. There are so many variables when it comes to how much you can borrow that lie outside of your existing equity, assets and income. By seeking pre-approval you have a far more accurate idea of how much you can borrow so your property search can be for properties in the right range.
Advantage over competition
If you put an offer in on a property and someone else offers the same dollar amount as you, you are likely to have a better chance of having your offer accepted simply because the process is already further along than your competition.
They enable you to act quickly when buying a property as the first stage is done, you just need to seek final approval. This can be attractive to sellers who are looking for a quick sale and sometimes can be a negotiating tool.
Access to auction
The other advantage is pre-approval gives you a great position to bid at auctions. When the hammer falls you are entered into a legally binding contract and Cooling Off Periods and Purchaser Terms can be waived. By having pre-approval, you can bid confidently.
If you’d like to learn more about mortgages or your options when it comes to financing a property purchase, get in touch with us and we can connect you with a trusted mortgage advisor.