It is important to note home loan pre-approval is not final. It is a conditional approval for a set amount for a set period of time, usually 3-6 months. This means you have given the banks an indication of the value of home you are looking for. The bank will do prelim checks and processes for pre-approval. If granted, you will generally have pre-approval for a set period of time, generally 3-6 months. Once you have found your property and an offer has been accepted, the banks will still undergo a full, unconditional approval process in order for you to purchase the property.
The pre-approval process will require you to collate many of the documents you will need for the full home loan application. So, in essence, it helps you to organise all your paperwork before you need to lodge your full application.
Once the pre-approval process is underway, sit back and wait for the outcome. It is not advised to head out and search for properties until you have the seal of pre-approval from your lender.
This application will ask many standards questions regarding your income, assets, expenses and liabilities (debts).
In order to support the above questions, you may be asked to supply bank records, pay slips, tax returns, loan statements and proof of identification.
Your lender will ask to see a proof of deposit funds in your bank account. If you are applying for a guarantor loan or a low deposit loan, they may ask for additional supporting documents.
A pre-approval will ensure you are placed at the head of the pack when it comes to placing an offer on a property. An agent will generally ask if you have pre-approval in place. It gives the seller confidence that the sale will proceed (based on conditions). It is important to note, even with pre-approval to always include a finance clause in your final sale contract.
A pre-approval will also give you confidence as a buyer in placing offers on homes you know you can afford. You can place bids on homes knowing you are looking in the correct price range. There is also the possibility of a quicker settlement as you have set the loan application wheels in motion.
A home loan pre-approval is granted for a set period of time. This is generally between 3-6 months. Considering your financial situation does not change in this time, you can have the confidence knowing your pre-approval is reliable.
Be aware that banks can withdraw their pre-approval should lending policies change. So, keep in touch with your bank during your pre-approval phase.
Now you have pre-approval you can start searching for your next property! If you do not find the right home within your pre-approval time period, get in touch with your lender to request an extension. Once you have found a property, placed a bid or an offer and are successful, you will then enter the formal application process.
As with any loan application, a pre-approval may be rejected for a number of reasons including:
At Organic Home Loans, we are here to assist you in making the process of securing your home loan pre-approval a straightforward one. We cut through the red tape and provide you with the facts. The more informed you are about banks’ expectations and requirements, the greater your chance of a successful outcome.
Let an Organic Home Loans expert help you with your home loan pre-approval and put you in the best stead to find the home of your dreams. Speak to our home loan experts today.
