Getting pre-approval is a smart idea if you need a mortgage and plan to purchase a home.
Your lender’s non-committal “go-ahead” in the form of a home loan pre-approval can give your property search some clarity and confidence. Before you discover your dream home, getting pre-approved for a mortgage can give you a realistic budget and spare you the disappointment of finding out that you can’t afford your dream house.
Home loan pre-approval explained
Pre-approval is also known as conditional approval or approval in principle.
When you receive a lender’s conditional approval to borrow money for a property, you have a home loan pre-approval.
Pre-approval for a home loan is often reserved for applicants who want to buy a new house rather than refinance.
How to get Pre-Approval for a Home Loan?
The pre-approval application process is generally similar to the regular home loan application process. You must submit a variety of supporting paperwork, including:
- Personal identity documents (e.g. birth certificate, passport, driver's license)
- Income documentation (e.g. payslips, tax returns)
- Details about any obligations you may have (e.g. loans, credit cards, HECS-HELP debt)
- Bank summary for the last few months
- Data on assets (e.g. vehicles, investments, superannuation)
- Proof of funds and genuine savings.
Benefits of home loan pre-approval
- You will be given an estimate of your borrowing ability. Borrowing capacity is based on your debt-to-income ratio and indicates how much you can borrow.
- You can focus your search to fit your budget if you have an idea of what you might get.
- When you do find a house in your price bracket, you are at ease enough to go forward with the auction or submit an offer.
- Bank summary for the last few months
- Data on assets (e.g. vehicles, investments, superannuation)
- Proof of funds and genuine savings.
FAQs
Got questions? Find answers to some of the most commonly asked questions about our financial solutions, processes, and services to help you make informed decisions.
LMI is a third-party insurance premium payable by you as the borrower, to protect the lender against the potential loss of money if the borrower is unable to repay the home loan. Generally, an application with a Loan-to-Value Ratio (LVR) of 80% or more may result in the borrower having to pay Lender’s Mortgage Insurance.
Extra payment is an excellent feature of a good mortgage deal. Here, your lender lets you make lump-sum additional payments along with your regular monthly payment. Making extra payments allows you to shorten the length of time you are paying your mortgage. Since your balance is being paid off faster, you will also have fewer total payments to make, thus lowering your interest. At Reliiance Financial Solutions, we can help you find the most suitable mortgage deal for you. We have a range of lenders that allow you to make as many extra repayments as you want, whenever you want, without attracting any penalties.
Stamp Duty is a government tax imposed on contracts, with the amount usually calculated as a percentage of the contract value. In layman’s terms, it is the tax charged for your legal documents to be ‘stamped’.
If you are planning to buy a property, it’s crucial to factor your State’s Stamp Duty into your budget.Chances are, based on your circumstances and state of domicile, you might be able to obtain a stamp duty exemption, or concessions (discount) against the purchase of your first home. Stamp duty laws get changed often, so be sure to check your State Government’s website for the most up-to-date information.
Did you know that some lenders would allow you to cash out any extra repayment you made whenever you need the money? You read that right. This useful mortgage feature is called “redraw facility”. You can withdraw any extra repayments or lump sum payments you make over the life of the loan. At Reliiance Financial Solutions, we will explain all mortgage products to you, including those which allow you to the redraw option.
Testimonials
Discover how we’ve helped our clients navigate their financial journeys with personalized solutions. Read their stories of success and empowerment below.
A 5-STAR RATED FINANCIAL SOLUTIONS PROVIDER BY OUR CLIENTS
At Reliiance Financial Solutions, we have been privileged to have worked with hundreds of remarkable individuals and families.
Very few things come close to receiving their genuine appreciation of our services. All we can say in return is – the pleasure was all ours.
It is also our pleasure to share some client testimonials with you. Please click on Video Testimonials to view them all. Use the buttons at the bottom of the screen to navigate through the videos.
