November 21, 2011
Future first homebuyers considering making their property move in the New Year have strong awareness of the importance of seeking loan pre-approval before house hunting, based on insights from national mortgage broker, Mortgage Choice.
A Mortgage Choice survey of first homebuyers looking to purchase before February 2013 found two-thirds of respondents intend to apply for loan pre-approval*.
According to Acting Head of Corporate Affairs, Belinda Williamson, first homebuyers are seeking assurance about their borrowing capacity before starting their property search.
“Our survey showed primed first homebuyers are making the wise choice to get their property finance pre-approved by a lender. This step helps buyers hone their property search and shop with confidence when negotiating a purchase or bidding at auction,” Ms Williamson said.
“Loan pre-approval provides a conditional approval of a loan amount and is usually based on an assessment of potential borrowers' individual circumstances, needs and ability to repay the loan.
“Keep in mind it's usually a limited time offer, for a period of three to six months and can be sourced through a mortgage broker. Once pre-approved, it's important to keep your broker up to speed with any changes in your financial situation as this may void the agreement.
“It pays to shop around. Not all lenders offer loan pre-approval and some don't conduct individual assessments, meaning you may get a different loan limit upon applying for unconditional approval and, like those without pre-approval, you could miss out on a property if it's above your loan limit.
“If you are looking to purchase in the New Year now is a good time get pre-approved so you don't miss out on potential property purchases over the holiday period.”
Mortgage Choice has compiled three top tips to help potential borrowers prepare for home loan pre-approval:
Organise your deposit and evidence of savings – You generally need a deposit of at least 5% of the purchase price, plus upfront costs. However, you will need to show evidence of a genuine savings plan, such as bank statements that illustrate a savings strategy for at least three and up to six consecutive months. Note some lenders now consider rent payments as savings evidence.
Check your credit history – Grey areas in your credit history, such as bill defaults and/or prior loan/credit applications can affect your loan pre-approval application. Resolve any issues with the relevant debt provider before you apply. For a copy of your credit file from mycreditfile.com.au you must provide personal details including your address, employment and driver's licence number.
Prepare your paperwork – Gather evidence of your employment, income, assets, liabilities and expenses. You will also need to provide your driver's licence or other ID, recent pay slips, tax returns and bank statements. Having everything at arm's reach will streamline this process.
For home loan tips, trends and other information, visit Facebook.com/MortgageChoice or Twitter.com/MortgageChoice. Or, call 13 MORTGAGE.
*The Mortgage Choice 2011 Future First Homebuyers Survey was commissioned to Ticketek Insights and ran online in February 2011.
For further information or to arrange an interview, please contact:
Mortgage Choice Corporate Affairs
(02) 8907 0472 / 0407 416 124