In recent weeks I have come across several cases of clients purchasing before gaining any pre approval prior to their purchase.
I thought I would share a few reasons why you should seek pre approval, particularly if you are buying at auction.
When buying at auction you are required to immediately pay a deposit at fall of hammer. This is normally 10% of the purchase price. Once purchasing at auction your purchase becomes unconditional hence you can not include any 'subject to's'. ie no subject to finance, no subject to building inspection and so on.
As a result, should you not be able to obtain finance post auction you expose yourself to loss of your deposit and potentially further legal action from the vendor.
Why get a pre approval :
- A simple process
- It's Free
- Irons out any issues prior to purchasing
- Piece of mind when attending auctions
- You can determine your maximum borrowing power
- Most Pre approvals remain valid for 90 days with several lenders prepared to issue pre approvals for 180 days
- If buying via private treaty an offer with a pre approval may be stronger than a similar offer with no finance pre approval
- If you change your mind and do not use a pre approval then the application is simply withdrawn