You 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.
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