House hunting in a fast-moving property market can feel overwhelming, especially when you’re competing with buyers who are ready to move quickly when the right property comes along. That’s where home loan pre-approval can make a real difference. pre-approval shows sellers you’re serious, sets a limit to your budget, and helps you feel more confident when making an offer. Read on to find out all you need to know about home loan pre-approval.

What is home loan pre-approval?

Home loan pre-approval – or conditional approval – is an indication from a lender of how much you may be able to borrow, based on your financial situation. While it’s not a guaranteed loan, it does give you a clear budget to work with and shows sellers you’re a serious buyer.

Getting pre-approval is one of the most important steps borrowers can take when preparing to buy a home. During the application process, the lender will verify your income, expenses, debts and savings before issuing a pre-approval. Any changes to your financial position, market conditions or the lender’s policies could affect your pre-approval.

Before final loan approval is given, the lender will usually require a property valuation.

Why are pre-approvals so important?

Getting pre-approval before you start house-hunting is a smart move. Here’s why pre-approvals matter:

• It helps you know your budget: pre-approval is a good indication of how much you may be able to borrow; it sets a limit to your budget. Instead of wasting time viewing properties outside your budget, pre-approval helps you focus on those you can realistically afford.
• It shows you’re a serious buyer: Having pre-approval can help you feel more confident when making an offer on a property and negotiating. In a competitive market, having that edge can put you ahead of other buyers.
• It helps speed up the process: Because most of the financial groundwork is done during the pre-approval process, getting final loan approval can be quicker. Instead of having to scramble to get everything together once you find your dream home, you’ll already have completed most of the home loan approval process during pre-approval.

When should you apply?

If you’re serious about buying property and ready to start house hunting then it’s worth applying for pre-approval. To set yourself up for success, do a little groundwork first:

• Research the property market to get a realistic idea of what homes cost in your chosen area.
• Use online calculators to estimate how much you may be able to borrow and what your repayments could look like
• Review your finances, including your income, expenses, savings and credit history to check everything is in order

Most pre-approvals are valid for 60 to 90 days, so it’s important to time your application carefully. Applying too early could mean your pre-approval lapses before you find a home, while applying too often will show up on your credit report and could even damage your credit score.

Take the next step

If you’re ready to take the next step and get pre-approved for a home loan, or you have questions about pre-approval, contact Oshin Home Loans today. We’ll connect you with one of our mortgage brokers who can talk you through your options for home loan Pre-approval.