First Home Buyers
WHAT IS A PRE APPROVAL?
It is essentially a mortgage approval subject to certain conditions being met, such as:
- Finding a suitable property
- Obtaining an Registered valuation (not always required)
- A PRE APPROVAL PUTS YOU UNDER NO OBLIGATION TO THE LENDER.
Why get a pre approval?
There are huge variances in credit policy between banks in the current housing market, if you sign up to buy a house and then it takes too long to obtain finance then you could end up losing the opportunity to buy the property.
When you have a pre approval you know how much you can borrow which will put you in a better position to negotiate.
Pre approvals are currently valid for 6 months, giving you plenty of time to look around for a home of your choice.
How long will it take to put a pre approval in place?
It pays to get organised in advance. From the time we receive all the necessary information we can usually obtain an approval within 3 days. However, the banks can be a bit slow from time to time, especially if the mortgage is over 80% of the property’s value. If you are borrowing over 80% allow for 5-7 working days to get an approval.
It is best if you speak with us early in your house buying process!
What paperwork is required?Step 1.
Complete an application that sets out your assets and debts, income and expenses.Step 2.
To verify the figures we need to support the application with proof of income (usually the last 3 pay slips), proof of a saved deposit, and 3 months of bank statements.
- In the current market every bank’s lending criteria is different. – In this market there is absolutely no point dealing with the bank directly because they can only give you one solution. – If they decline you need to start from scratch and go to another bank – Every time you go to another bank they do a credit check and it doesn’t take long for it to look like no one wants to give you a mortgage.
- We work on your behalf and can see from your application which bank will be a good ‘fit’ for you.
- Save yourself heaps of time, time better spent looking for a new home,(much more interesting). We have worked with people who have ended up so frustrated dealing with the bank on their own behalf and who have missed out on property as a result. Since we work with the various banks on a daily basis, we know what the banks are looking for and the hooks to look out for. We are seeing a number of clients that get quite far through the process to then discover problems with finance
Can I borrow over 80%?
Yes – 95% is available again for buying a home for yourself to live it. However, if you have good income and no other debts. Also borrowing over 80% costs more. That will either be as an upfront fee by the lender (up to 2.5% of the mortgage value) or as a premium added to your mortgage rate. With the upfront fee option, it can be added to your mortgage balance so you do not need to “find the cash” to pay it. If the lender includes a rate premium, this can range from 0.50% to 1.00% above standard mortgage rates, generally until your level of lending comes back in line with 80% of the ‘then’ value of the property A registered valuation will be compulsory (cost $500+). You will also need ongoing mortgage protection or income protection insurance. It simply does not make sense to be taking risks at this level of borrowing.
We can arrange a “Welcome home loan” but there is strict criteria.