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The benefits of home loan pre-approval for a first home buyer

Securing a home loan pre-approval allows you to buy property or bid at auction with confidence.

You can secure a commitment from the bank or lender of your choice for how much you can borrow before you buy, with a formal, written home loan pre-approval.

An official conditional pre-approval isn’t just an ‘indication’ of how much you can borrow it is a real commitment from your lender as to how much they are willing to lend you, and it may speed up the final approval process when you do find the right property.

You’ll know exactly how much money you have to negotiate with and can comfortably sign a contract or bid at auction, under similar conditions as a cash contract. This can also work in your favour if you are up against rival buyers considering the same property.

Advantages of a formal home loan pre-approval:

• you’ll know your maximum house price or bidding limit (if buying at auction)
• you’ll know what your maximum required repayments will be
• your final loan will be organised faster
• there is no cost to you
• the pre-approval will last up to 3 months (and can possibly be extended if needed)
• Sellers are often more receptive to offers from buyers with confirmed finance arrangements 

Even with a written home loan pre-approval there will still be some conditions to meet before a final unconditional approval will be issued, such as:

• finding a suitable property
• receipt of a registered valuation
• Lender’s Mortgage Insurance – LMI (if applicable)

Home loan pre-approvals can provide peace of mind and mean one less thing to do during that busy and exciting time when you do find the right property.

If you are already looking at property or considering buying your first home or first investment property purchase I thoroughly recommend you talk to an experienced mortgage broker first. 

Your mortgage broker is going to be more than just someone to talk dollars with. They work with clients purchasing and selling property day in and day out and will know the purchasing process back to front. 

Not only will they manage your finance pre-approval application, but they will also be an invaluable guide and will even be able to recommend other relevant professionals to help you through the process should you need them. Experienced professionals like real estate agents, buyers agents, solicitors, accountants, tax advisors, valuers, pest inspectors and more.