As mortgage brokers, we often get asked by first home buyers to explain what a home loan pre-approval is and how it can help you get your loan. So here are the key points to understand:
What is a home loan pre-approval?
Also known as ‘conditional’ approval, getting pre-approval of a home loan means that a lender has agreed in principle to the loan, without actually granting final approval. A mortgage broker can help you through the process of getting pre-approval and understanding which lender will best suit your circumstances.
Why get pre-approved?
Once you get pre-approved for a home loan you can focus on your property search with confidence, and knowing how much you can afford will help narrow down the list and keep your shortlist realistic.
And while other potential buyers are shopping around to see what’s on the market, with pre-approval you’re already a step ahead. You can position yourself as a genuine buyer with real estate agents and vendors, which is more important than ever in the COVID economy where borrowing has become more difficult for some.
How long does pre-approval last?
Conditional or pre-approval lasts 90 days but can often be rolled over, just by providing updated information.
But as Runway’s Flight Engineer and home loan aficionado Kim Kershaw explains, it works best when your circumstances aren’t likely to change.
“A home loan pre-approval isn’t an ironclad guarantee; it’s an approval based on something that will happen in the future and if nothing changes (like your employment) then that finance will likely become formal and be approved. If, for example, you change jobs or change your career within two months of pre-approval, you’ll need to start the process again.”
What do I need for conditional approval?
Different lenders have different requirements, but most will need to know:
- how much you earn and your employment type (salary, self-employed, contract etc)
- how much you owe (loans, credit cards etc.)
- the value of any assets you own (including cars, shares etc)
- details of your living expenses
- all of the above for your spouse or partner, if applying together
You’ll also need to provide an indication of the type of property you want to buy – location, house or apartment etc.
The good news is that a mortgage broker can walk you through every step of the process and understands what is going to hit the mark with different lenders.
How do I apply?
Whether you’ve still got questions or you’d like to kick off the process, you can start right here in our online mortgage hub.
Runway Pilot Paul Dunn says: “We’ll always get you the cheapest loan with the lowest fees for your individual circumstances. And we’ll also give you the commitment of our time and knowledge; if you want to have that loan paid off quicker, we’ll work with you to get that loan paid off as quickly as you can.”
At Runway Finance we’ve got a no frills, no fuss approach to help you take off, and we’re fully loaded with great home loan deals and expert service.