Today MyRate reviews the definition of a pre-approved loan.
Pre-approved finance gives you an advantage over other buyers who are yet to secure a loan as well as giving you a cast iron budget to work to.
Knowing your purchasing power is essential before diving into the property market. Not only will this help refine your property search, it also ensures you can move quickly when you find your ideal property.
- What is it?
Pre-approved finance is an undertaking to lend an agreed amount within a set timeframe, subject to the valuation of a property and sometimes other minor conditions.
Subject to the conditions attached, it essentially confirms what you can borrow before you begin your property search.
- Why get pre-approved?
There is considerable merit in knowing your budget before you go out to buy.
This will help you refine your property search, ensuring you don’t waste valuable time looking at properties that are out of your budget.
But not only does this give you a firm guideline as to what you can afford, it is a strong endorsement to real estate agents and to the seller that you’re a serious buyer. This may mean that you’re in a stronger position to negotiate on price but the real benefit is if there are two offers on the table – one pre-approved and one not; you can guess which buyer will get the thumbs up.
- So how do I do it?
Securing a pre-approved loan is surprisingly easy to organize.
The application for a pre-approval is much the same as applying for a mortgage. You’ll need to provide proof of income, savings etc and they usually take no more than two to three days to arrange.
The good news is that there is absolutely no obligation with a pre-approved loan, so if you don’t decide to buy, the pre-approval simply expires after the agreed timeframe.