Thinking of buying property in Canberra this spring? Getting a pre-approval for a loan is taking longer that you would expect, so if you’re hoping to buy it’s best to start this process as soon as possible. Here’s what you need to know about the pre-approval application process.
A loan pre-approval is a conditional approval for a loan that your lender provides based on your current financial situation. Getting a loan pre-approval gives you some certainty that you will be approved for a loan for the same amount when it comes time to buy a home. It also helps you set a budget when you are bidding at auction or making an offer.
To complete your pre-approval appraisal, your lender will look at your ability to service the loan over the long term. They will take into consideration your:
Plus they will look at how often:
When putting together an application for a pre-approval, you will need to look closely at your own financial situation. Spend time looking at your weekly, monthly and annual expenses. Also look at your debts to create the most complete financial picture possible.
It’s very important to note that a pre-approval is not a guaranteed loan. Your pre-approval is only your potential lender’s notification of how much they expect to lend you.
The amount you can actually borrow may change when you make an official loan application, particularly if your circumstances have changed. Factors that could impact your lender’s assessment of your ability to repay your loan include:
Even though pre-approvals are not guaranteed loans, they generally set your expectations about what houses you can afford. So, when you make your pre-approval application, it’s important to take your longer-term financial goals into account.
You may be confident in your ability to repay a certain loan amount over the coming year, for example. However, have you factored in goals such a family holidays, future school fees and funds to cover periods of unemployment?
Pre-approvals are usually valid for up to 90 days. That said, depending on the lender, your pre-approval may be renewed to allow you more time to find a property.
Milestone can help you navigate the pre-approval process and find the right loan amount for your particular financial situation. To discuss getting a pre-approval, get in touch with Milestone Lending today on (02) 6176 3110.
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Visit these links for more information about buying a home or buying an investment property.
