How Do You Get Pre-Approved?
A Pre-approved loan is also known as approval in principle. Pre-approval is when your bank conditionally approves you for a loan before you buy your dream house.
Pre-approval can save you a lot of time and stress. It means you can go from open houses and inspections knowing exactly how much you can afford to spend. You know you’ll be able to get a mortgage on a house within a certain price range, so you won’t waste time looking at homes you can’t afford.
The bank or other lender checks your finances and assesses whether you’ll be able to successfully repay a loan. If they deem you eligible, you’ll be granted pre-approval to borrow up to a certain amount. Pre-approval lasts 3 to 6 months, giving you plenty of time to find that house you can imagine yourself growing old in.
Steps To A Pre-Approved Mortgage
- Review Your Current Financial Situation
Look at your income compared to your expenses, and what you owe on loans etc. You should be able to get a good idea of what you can afford to borrow.
- Research Your Preferred Home Loan Type
There are 3 main mortgage loan types in Australia. One suited to most individuals.Variable Rate Loan – relies on the Reserve Bank of Australia’s ever-changing cash rates, and the subsequent fluctuation of interest rates. This means that borrowers may have lower repayments in a certain month, but if rates rise their payments will as well.Fixed Rate Loan – locks in your home loan interest rate for a period of 1-5 years, generally at a rate above the current variable. Fixed loans are great for borrowers who are on a budget or don’t want to bet deal with inclement interest rates.Interest Only Loan – the interest-only arrangement is usually only for seven years. After that, the borrower will have to start paying down the usual principal and interest repayment. It’s also a good option for young home buyers and low income earners keen to own their own abode without much in their bank accounts, as they wait to generate more income later.
- Complete The Pre-Approval Application With Your Lender
Your bank will be able to assess your credit report, your current financial situation, and the best suited loan type for you
Additional Expenses To Cover?
If there are additional expenses like moving costs that you can’t afford, feel free to apply for a small loan through us ($2,100 – $5,000)