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How a home loan pre-approval can help your house hunting.

11 November 2021
• 3 minutes read

The past year has seen more and more first home buyers entering the housing market. Many have taken advantage of the low interest rates  and government assistance schemes  to step onto the property ladder. Many first home buyers have also used a home loan pre-approval to help secure their first home. If you’re keen to know the benefits of a home loan pre-approval, and how to get pre-approved for a home loan, we’re here to help with all you need to know.

What is a home loan pre-approval?

A home loan pre-approval is a simple way to provide you with greater confidence when you’re house hunting. Quite simply, your lender has done an assessment of your financial situation and has conditionally agreed to lend you a certain amount of money to buy a property. This gives you a much better idea of how much you can borrow with that lender, which in turn helps you search for properties you can afford. Remember, the key word here is ‘conditional’ ­– it’s not a full approval, as this occurs once a contract of sale is held.

Do you need a home loan pre-approval?

While a pre-approval isn’t mandatory and you can still apply for a home loan without pre-approval, it does give first homebuyers a really good indication of how much they can borrow. It can also help you avoid the disappointment of signing a contract on your ‘dream house’, then realising you can’t borrow enough to purchase it.

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Benefits of a home loan pre-approval

Apart from assisting your search, a pre-approval shows real estate agents and, more importantly, sellers that you’re a serious buyer. You’ve done your research, started sorting your finance and can confidently place an offer. For auctions, some lenders may have a different pre-approval arrangement that provides even more certainty.

Disadvantages of a home loan pre-approval

There aren’t too many cons when it comes to getting a pre-approval. One to be aware of is that a credit check will likely be completed, and this could impact your credit score. That’s why it’s best to only get a pre-approval with your preferred lender, rather than doing multiple applications.

Getting pre-approval

Applying for a home loan pre-approval is as easy as having a chat with your preferred lender about your financial situation. They’ll ask about your income, your expenses, and how much of a home deposit you’ve saved. They may also ask about the type of house you’re looking to purchase and which suburbs you’re considering.

As a guide, most pre-approvals are valid for 90 days, which should give you enough time to find a place to call home. If you sign a contract of sale with a pre-approval in hand, your lender may ask a few more questions and request updated documents, like your latest payslips and bank statements before confirming full approval.

Does a pre-approval guarantee home loan approval?

No, but it will provide a really good indication of how much you could borrow.  Once you’ve signed a contract of sale, the lender will usually arrange a valuation of the property and want to verify the details of your financial situation. Another factor that may impact the final outcome is the prevailing market conditions.

Getting a home loan  pre-approval can deliver a great deal more clarity and confidence when looking for a home.  Ready to get a home loan pre-approval online ? It’s the more convenient and quicker way, so you can stay focussed on looking for your dream home.

Important Information

Great Southern Bank, a business name of Credit Union Australia Ltd ABN 44 087 650 959, AFSL 238317. Conditions, fees and charges apply. This is general information and does not take into account your objectives, financial situation or needs.  Consider the appropriateness of the information, including the Terms and Conditions (T&Cs) booklet, before acting on it. The Financial Claims Scheme may apply to this product; refer to the T&Cs for more information.

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