Soon-to-be borrowers sometimes rely on their own judgment or that of an online calculator to determine the property loan amount they can afford to borrow and repay. Risky business.
Jumping head first into a property purchase without confirmation from a lender of the financial limits may see a borrower falling short on funds because their dollars and sense don't match up.
Australia's largest independently-owned mortgage broker, Mortgage Choice encourages property buyers of all types looking to purchase in the New Year to be realistic about their borrowing power by looking into a home loan pre-approval.
Mortgage Choice spokesperson, Kristy Sheppard said, "As potential purchasers prepare to head into the heat of the summer buying season it's always a good idea to know exactly how much you can afford to spend on your ideal property."
"Online loan repayment calculators are a handy starting point, however, borrowers-to-be need to understand they provide only an estimate of a person's borrowing power and ability to repay.
"On the other hand, getting a home loan pre-approved by a lender provides a conditional approval of a loan amount. This helps narrow the property search and gives confidence and a competitive edge when it comes to negotiating a purchase.
"Genuine loan pre-approval follows a similar process to a full loan application whereby borrowers will be assessed on their individual circumstances and needs and are required to verify their identity and ability to repay the loan. Other conditions usually need to be met to move to full finance approval, such as a suitable property valuation.
"Keep in mind a pre-approval is usually granted for a period of three to six months and can be sourced through a mortgage broker. During this time, it's important for borrowers to regularly check-in with their broker as changes in their financial circumstances may void it.
"It's also important to shop around. Not all lenders provide loan pre-approvals and some do not tap into an individual's financial situations in order to do so. This may see a potential buyer receive a different borrowing limit upon applying for full loan approval and, like those without pre-approval, this could see them miss out on a property because it's outside of their loan limits."
Top five benefits of a home loan pre-approval are that it:
- Gives you time, without the pressure to buy, to explore your loan options thoroughly.
- Saves time (and lessens possible disappointment) by concentrating the property search in a feasible price range.
- Enables real estate/buyers agents to see you as a serious property buyer.
- Helps you gain confidence for bidding at auction or negotiating a purchase.
- Quickens the settlement process as the loan is already part of the way approved.
Call Mortgage Choice on 13 MORTGAGE.
For further information or to arrange an interview, please contact:
(02) 8907 0472 / 0407 416 124