The pre-approval process
It's easy to get carried away when you find your dream home on the internet or attend an action-packed auction.
But if you make an offer before you know how much money you can borrow, you might commit to buying a property that ends up being out of your budget.
It can be very risky to rely on online home loan calculators, because those are one-size-fits-all tools that can't possibly account for all your personal circumstances.
That's why it's a good idea to get a home loan pre-approval instead. A pre-approval is a lender's assessment of how much money they'd be willing to lend you, based on your personal circumstances and the type of property you plan to buy.
How long is the Pre-Approval?
The pre-approval is valid for 3 months, however you can extend this to 6 month. Some lenders will request for additional information including:
Your two most recent payslips
Your most recent salary credit statement
Any information regarding changes in assets and liabilities position since pre-approval
Getting a Home Loan Pre-Approval
We'll begin with a brief conversation to understand your situation and needs.
We'll request that you provide documentation of your income, savings, and any debts (such as credit cards or other loans).
After checking your information, we'll suggest a few suitable lenders and loans for you.
We'll create the application for you to sign.
We'll submit your application to the lender and manage the process with them.
The lender will review your situation and provide a pre-approval.
What happens after your offer is accepted or you win at an auction?
The journey from a pre-approved home loan to unconditional approval involves several stages:
1. Property Valuation Once you find a property and make an offer, the lender may conduct a property valuation to ensure it aligns with the loan amount.
2. Formal Loan Application We'll help you submit a formal loan application, including details about the property you intend to purchase.
3. Conditional Approval The lender reviews your application and may issue a conditional approval, outlining any outstanding requirements or conditions to meet.
4. Satisfying Conditions You work on satisfying any conditions set by the lender, which may include additional documentation or meeting certain criteria.
5. Legal and Title Checks The lender conducts legal and title checks on the property to ensure there are no legal issues or encumbrances.
6. Unconditional Approval Once all conditions are met, the lender provides unconditional approval, indicating that you have met all requirements, and the loan is ready for finalisation.
7. Loan Offer Acceptance You formally accept the loan offer, sign the loan documents, and return them to the lender.
8. Settlement The settlement process involves the transfer of funds, and ownership of the property is legally transferred to you.
9. Loan Finalisation The lender disburses the loan funds, and your home loan is finalised, marking the completion of the process.
It's essential to communicate effectively with your mortgage broker and lender and promptly provide requested information, and work closely with relevant parties, such as real estate agents and legal professionals, to ensure a smooth transition from pre-approval to unconditional approval.