The 5 Benefits of a Mortgage Pre-Approval

3D white people. Resting on a check markYou have spent the past 3 weekends looking at properties and it’s all becoming a little too much.  Do you spend $350,000 on the 3 bedroom house or invest a little more and purchase the 4 bedroom property for $420,000?  Would a unit actually be a better property purchase than a house if it comes with facilities such as swimming pool and gym?

Purchasing a property can be a stressful event.  Trying to find the perfect property to suit your requirements (whether it be for your residential property or an investment property) can be challenging. So is there anyway to ease some of the pressure?

Yes and the answer is – a mortgage pre approval

So, what is a pre-approval?

A mortgage pre-approval is an agreement with a specific lender as to the amount they are prepared to lend you for a property purchase.  The mortgage lender will also set specific conditions in relation to the finance which is important to know ahead of signing a contract.  Mortgage approvals are normally valid for up to 90 days assuming no information provided has changed.

Why obtain a mortgage pre-approval?

 The advantages of a mortgage pre-approval include:

  •  Knowing your borrowing power which reduces time looking at properties out of your      price range
  • Being able to negotiation with agents within your parameters.  Having an approval provides you with a much stronger negotiation position.
  • Being able to purchase a property via an auction (some mortgage lenders have      restrictions on this).
  • Taking the stress out of waiting for an approval once you’ve gone to contract on a property
  • It results in a quicker settlement time frame.

What’s required?

The mortgage pre-approval process is the same as applying for finance once you have signed a purchase contract.  Mortgage lenders different with their requirements but in general:

  •  Evidence of employment and income
  • List of assets and liabilities
  • List of monthly expenses
  • Evidence of savings
  • Indication as to the general area you are planning to buy in

Not all mortgage lenders offer a mortgage pre-approval but, if you are unsure of your borrowing potential, or servicing is tight, a pre-approval can save a lot of heart ache.  Signing a purchase contract, applying for mortgage finance and getting this finance declined can cause problems all round.  A mortgage pre-approval can add some comfort when signing the purchase contract and will also speed the process up.

If you think a mortgage pre-approval would benefit you, contact us now to discuss this further.

Did you like this article?
If you would like to receive more articles similar to this, feel free to subscribe to our list and we’ll guarantee that we’ll only forward timely and informative articles that we promise will help you create wealth or save money.  If you have a friend that you think could benefit from this article, please feel free to forward this through to them.

NB: Your privacy is of utmost importance to us and your details will never be passed onto another a third party.  See our privacy policy.

This entry was posted in Investment Property, Property Finance, Residential Property Finance and tagged , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

* Copy This Password *

* Type Or Paste Password Here *