Dec 13, 2016 7:51:00 AM

Securing pre-approval for your mortgage

Topics: Mortgage Advisers, Pre-approvals, Mortgages, Lenders 0


Before you start house hunting for your dream home, it’s a good idea to get pre-approval for your mortgage. A pre-approval gives you peace of mind knowing how much you can buy for, shows sellers you’re serious about buying, lets you bid at auctions, and puts you in a better negotiating position when it comes time to make an offer. Read on to find out more about getting pre-approval for your home loan.

What is a pre-approval?

A pre-approval is an acknowledgement from your lender that you can borrow a certain amount, provided the property that you plan on purchasing meets the lender’s home lending criteria and general terms and conditions.


What are the benefits of getting a pre-approval?

A pre-approval lets you shop with confidence and bid at auctions, and it shows the seller and agent you’re serious about buying. It lets you know up front how much you have to spend so you won’t be setting yourself up for disappointment further down the track. Getting a pre-approval won’t cost you anything and it’s valid for up to three months.


What do I need to apply for a pre-approval?

When applying for a pre-approval, you’ll need to provide documentation that includes proof of your deposit, income, your monthly expenses and outgoings.

  • Proof of income: the lender will need to verify you have a regular income in order to service your home loan. You may need to provide three of your most recent payslips or if you’re self-employed, your most up to date financial statements.
  • Your expenses: the lender will need to verify what your outgoings are to determine your ability to make payments on your home loan. Expenses will include your day to day household costs, financial commitments, and other debt like credit cards, overdraft or HP.
  • Evidence of your deposit, be it your own savings, gifted funds or government first home buyer assistance.
  • Identification, proof of address and recent bank statements will all be required.
  • Property information: if you’ve already found a property you’re interested in, include in your application the sales and purchase agreement, a valuation if you have one, and any other property reports.


What are the conditions of pre-approval?

Your pre-approval may have conditions attached that you’ll need to satisfy in order to finalise your mortgage. When you receive your pre-approval check to ensure you understand each of the conditions and what must be done in order to meet these.


Why are applications for pre-approval declined?

There are a few reasons why your application for pre-approval may be turned down. These include:

  • You’re unable to show proof of income.
  • Your credit rating is low.
  • Lending policies have changed and you no longer qualify.


Can my mortgage adviser help with getting pre-approval?

Before you approach your lender for pre-approval, get in touch with a Mortgage Express adviser to talk about your situation. It’s important you shop around and explore all of your options before committing, in order to find the best deal out there. As not all lenders have the same lending criteria, we’re often able to find a solution for clients who may have already been turned down. Mortgage Advisers are paid by lending institutions which in the vast majority of cases means there’s no cost to you and no surprises.