Tips

Pre-Approved loans

A loan pre-approval is written confirmation that a lender has reviewed you and your current financial position and is prepared to lend you money up to the pre-approved loan amount.

Every lender has their own terms and conditions, and this is intended only as a general guide to understanding this topic. Contact us to discuss your individual circumstances.
Definition
A loan pre-approval is written confirmation that a lender has reviewed you and your current financial position and is prepared to lend you money up to the pre-approved loan amount.
It will be subject to the property you buy being acceptable to the lender. There may be other specific conditions noted as well, e.g. acceptable contract of sale, mortgage insurer’s approval, re-verification of your employment etc.
Benefits
✓You can bid at auction or negotiate on a property with confidence that the initial loan checks have been completed.
✓You will have a maximum property purchase price.
✓Lender pre-approvals are generally free
Disadvantages
✓A pre-approval is not a guarantee of unconditional loan approval.
✓There will be a note on your public credit file that you have made a loan enquiry.
✓Pre-Approvals do expire. Most will last for 90 days and can be extended for a further 90 days.
✓Once a pre-approval expires, we have to start a new loan application from scratch.
Pre-Approvals may be re-assessed and loan amounts reduced if interest rates or living expenses increase.  If this is of concern for your personal situation, we will recommend a lender who will honour the original maximum loan amount.
✓If the property you buy is unacceptable to the lender, then the pre-approved loan will not be unconditionally approved. Property types which can have limited acceptability may include Company Title, acreage, and apartments which are tiny, high density and/or serviced.

Things to consider
✓There is no obligation to complete a loan with that lender.

Once you do buy a property
✓There may be a re-verification of your employment status. So, if you have changed jobs since the pre-approval was issued and you are on probation, this could invalidate your pre-approval. The lender will re-assess your application in view of your new role and salary.
✓You may be required to provide updated asset and liability statements and proof of money available to complete the property settlement.
✓Always liaise closely with me during your house hunt – any changes in your finances, employment and family status will change your pre-approval status.

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