2 December 2015
First Home Buyer
2 December 2015

Understanding pre approvals

Understanding Pre-Approvals

The application process for a home loan can be a complicated one. So Don’t put yourself in a stressful situation

Here’s a breakdown of the different levels of approval and what they actually mean for borrowers.

Verified Pre-approval

Loan pre-approval has different names with different lenders. It can be referred to as a conditional approval, indicative approval or approval in principle.

Pre-approval is only an indication from a lender that they are willing to approve the loan once a full application is submitted. In most cases, a pre-approved loan is not fully assessed by the lender and as such, some lender will not fully vet through the supporting documents until buyer finds a property. As it too many pre approvals will clog up the system.

Fast on the spot approval

Most lenders offer to pre-approve a loan application online in as little as thirty minutes. On-the-spot approvals don’t have time to be assessed by the lender’s credit department, and that means, they are not indicative that a loan will be formally approved down the track.

Borrowers should not take on-the-spot approvals as the OK to make an offer on a property or bid at auction.

The full loan application process

For buyers to have the confidence that they will receive formal approval, they are required to provide the following:

  • A completed and signed application form
  • Latest Payslips and PAYG summary or Tax return
  • Bank statement showing the Funds to complete or if with LMI needs to show 5% Gen Savings
  • Need to tell the bank any other debts you have, if you hide from they and they find out, the application will be decline, or asked to explain.
  • A passport and driver’s licence as the 100 Point IDs

A full assessment of your loan application by the lender’s credit department could take a few days or more.

Have the confidence to buy

Often, people who are going through the home buying process don’t have a full understanding of what the different approval options mean.Hence working with a mortgage broker to get everything sorted is the most important thing

  • Has the application been accepted by the credit department?
  • Can I avoid LMI or maybe reduce borrowing to lessen LMI amount. Note Normally LVR 90% or less pays less LMI, anything more than 90% will invite more LMI
  • There will be some conditions on the conditional approval, once we satisfy the conditions will have a full approval. if everything is clean, it will be Subject to ” Contract of sale” meaning finding a house
  • Is this preapproval good for auction?

Please Contact Victor Foo  Do input some figures regarding your current situation. We as brokers, assess your borrowing power offline, if you go to a bank and ask, it will most likely create a credit enquiry on your credit file, too many credit enquiries will affect your credit rating.

You are dealing with the Business Owner direct, we do this for a living, not for a paycheck for bonus like the bank’s staff. Our service is free for you No pushy sales, any questions in mind, Send Victor Foo an email, or SMS, or call, even on weekends.

Different individuals have different circumstances, gone are the days of going to one bank, you will need to explore your options, and while exploring don’t mess up your credit file. Doing this with Victor Foo, I will prepare you to buy, with generally cheaper overall option.

Leave a Reply