Always secure a loan pre-approval before you start your property hunting process
Always talk to your bank or credit adviser first
When you want to buy a home, the temptation is to start looking for it. However it’s much smarter to organise your finance first. And don’t just pre-qualify for a home loan – get pre-approved!
Why you shouldn’t find your home first
You find it. Your dream home. A place with “character”, near the beach, with three-and-a-half bedrooms, walk-in pantry, off-street parking, and access to good public schools for the kids you don’t have yet (or maybe have). You pay for inspections, have your offer accepted, and brief an architect on your renovation vision, only to find you get rejected for a home loan.
Sorting the finance first saves time and money
It’s more fun looking for a home than finding the finance. No question. But if you put the cart before the horse you’ll just waste time and money – and put yourself under a lot of unnecessary stress.
Pre-qualifying for a loan isn’t really enough
Some people get “pre-qualified” for a loan. But “pre-qualifying” for a loan doesn’t necessarily mean that the institution will lend you the money. The questions asked during pre-qualification are basic and the checking minimal. “Pre-qualification” merely indicates the upper limit of the amount you might be loaned, assuming the information you supplied is accurate, and your credit history is favourable. There is a better option.
Get pre-approved for a home loan – then look for the home
If you want a more reliable assessment of your borrowing capacity, you should try to be pre-approved for a loan. This is a lengthier process (1-2 weeks) that involves serious checking of your income and credit details, and lending institutions generally charge for the service.
However, pre-approval can spare you the heartache of finally finding the property you want to buy, only to find you can’t borrow enough.
How Can We Help?
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The BEN Financial Stress Analysis provides you with a snap-shot of your financial capacity. It tracks your financial performance based on market Lending Credit Assessment Criteria.
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