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Confused about home loan pre-approvals? Follow these four steps


Ready to buy a property? You’ll need to show the seller you have enough money. For most people, this will mean getting a loan, and the first step to getting one is obtaining pre-approval for it.

Pre-approval – also known as conditional approval or approval in principle – is an indication from a lender as to how much you can borrow. If you have pre-approval, vendors and agents know you’re serious about buying. Here are the steps you need to follow.

1.Gather your financial information

To get an idea of how much you can borrow, and therefore what you can afford to buy, you need to give the lender a comprehensive picture of your finances. This includes your income, assets, and financial obligations such as existing debts and living expenses (including ongoing bills, entertainment, food and car expenses, etc). You’ll need evidence of everything.

2.Meet your Summit Property Finance broker

Make an appointment to speak with us. We will provide a list of what you need to bring with you.

We will use your information to calculate an approximate borrowing figure. If you want to proceed, we can lodge a pre-approval application with the lender of your choice.

3.Undergo a credit check

The lender will arrange for an independent credit bureau to perform a credit check on you. This may affect whether or not you can borrow money, and how much.

4.Receive conditional approval

Assuming your credit rating allows you to borrow, you’ll then receive a conditional approval certificate from the lender. The certificate is usually valid for 90 days. This is an indication, not a guarantee, of the amount you can borrow.

Use this figure to work out how much you can spend on a property, taking into account the size of your deposit. Factor in expenses such as conveyancing fees, stamp duty and LMI (if applicable).

Securing pre-approval will allow you to house hunt with confidence.

What happens next

Once you’ve put in an offer on a house – whether at auction or a private sale – you’ll need to get full approval on the loan. Contact us with details of the property, and we will work through the home loan application process with you.

Obtaining pre-approval for your loan is an important part of the home-buying process. Contact us today for help with finding out how much you can borrow.


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