A pre-approval is the exercise of a lender undertaking a full assessment of your financial position to provide an indication of how much they would be willing to lend to you.
It involves going through the loan application process as if you have actually purchased a property, however once completed, should still be subject to certain conditions such as your financial circumstances remaining the same and a valuation on the property once you have purchased.
How long does my pre-approval last for?
Pre-approvals generally last between 3-6 months with lenders, do not cost you anything to apply for & can be easily rolled over if you don’t purchase within that window.
Why pre-approvals are a point of difference and crucial at an Auction
Obtaining a fully assessed pre-approval breeds confidence knowing you have a more certain idea of how much you can shop for in the property market. It also means your most of the way to their in obtaining formal approval once your desired property has been identified. This is a big point of difference when competing with other buyers when vendors have to decide between which offer to accept.
Furthermore, pre-approvals are also highly recommended when attending auctions. Successful bidders at auctions have their offers deemed unconditional, meaning they are fully committed towards meeting settlement otherwise the initial deposit made, could be lost & non-refundable, thus ensuring you have loan approval is crucial.
Does it guarantee I will be formally approved?
The simple answer is no. A pre-approval even once obtained as mentioned will be subject to certain conditions thus if your employment circumstances for example where to change thereafter, or your decided to take out a car loan or a new credit card before purchasing, then your current pre approval could be void. Furthermore, lenders have the authority to change their policies at anytime and this could affect the outcome when going from pre to formal approval.
Getting pre-approval is just putting you in a position to be as prepared as possible and minimise risk.
How do I get a pre-approval?
If you are considering purchasing a property in the near future, we highly recommend getting your pre-approval sorted out as soon as possible.
Contact us today and we’ll assist you in comparing which lenders may best suit your needs to assist you in purchasing with confidence.
The information is general in nature and does not take into account your particular objectives or financial situation. It does not constitute, and should not be relied on as, financial or investment advice or recommendations (expressed or implied) and is not an invitation to take up securities or other financial products or services. No decision should be made on the basis of the information without first seeking expert financial advice. Your full financial needs and requirements would need to be assessed prior to any offer or acceptance of a loan product. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.
GKL Financial Group Pty Ltd (Credit Representative Number: 485271) is a Credit Representative of the licence holder Victorian Financial Solutions Pty Ltd (Australian Credit Licence Holder: 431349)
