Give yourself the home buying edge by getting your home loan pre-approval ready in January
Is buying a home your New Year’s resolution? Get yourself ready to make an offer on your dream home in early 2021 with our help.
What is home loan pre-approval?
Home loan pre-approval, sometimes called conditional approval or approval-in-principle, is when a lender gives you an estimate of how much you could borrow.
The estimate is based on the lender’s assessment of your financial situation. As the name suggests, the approval is conditional. The conditions will vary according to your circumstances but might include paying off a debt or providing a building inspection or a professional valuation of the property you would like to buy.
Why should I get pre-approval, and why should I get it now?
Pre-approval is not compulsory when buying a home; you can apply for a home loan without it. It can, however, give you the home buying edge.
Because pre-approval tells you the maximum funds available for you to borrow:
- It can help to narrow your property search. You’ll know which properties you can realistically afford.
- It allows you to make an offer and negotiate with more certainty or bid with more confidence at auction.
- It can make you a more appealing buyer because it shows that you are ready to proceed with a purchase.
Because you’ve already done much of the paperwork required to obtain finance, having pre-approval can speed up the process once your offer is accepted.
If you’re serious about buying a home in the new year, getting your pre-approval sorted in January will give you a head start. Whilst pre-approval is only valid for a set period, usually three to six months, it can take time to organise. Getting your pre-approval done early in the year puts you in an ideal position to make an offer on your dream home sooner rather than later.
Getting ready to apply
- Review your finances
Before you apply, have a look at your finances. This includes your income, your household expenses, what assets you own and how much you owe. From there, it might be possible to get an idea of how much you can borrow. Our borrowing power calculator is a handy tool. How much you can afford in repayments each month will also affect how much you can borrow – try our loan repayment calculator.
- Research and compare home loan types
It helps to understand the different types of home loans and home loan features on the market, such as fixed rate or variable rate, offset or redraw and so on. That way you can begin to narrow down which type of loan might be right for you.
- Talk to a reputable, experienced, and accredited mortgage broker
With more than 20 years’ experience, Educated Finance mortgage brokers can help you find the right loan and guide you through the pre-approval application process. We have access to over 30 lenders, and we’ll scour the market to find the loan that best suits you. We’ll help you find the most suitable type of loan, whether you have a deposit, or are looking for a no deposit or even a bad credit loan. We’ll find you a loan with an interest rate and repayments that work for you.