HOW DOES PRE-APPROVAL OF A HOME LOAN WORK?

Pre-approval is arguably the most important step to take when buying a property. Obtaining pre-approval for a home loan will save you a lot of time house hunting for something that is not affordable or a house you may not obtain finance for.

Imagine finding your dream home, getting excited about it, and approaching your bank for a home loan, only to learn you don’t qualify for a home loan. This will create huge disappointment and sentiment that may deter you from buying your first property.

Getting pre-approval for a home loan will determine what amount your bank will grant you based on your affordability. This will then allow you to calculate transfer costs, transfer duty, and other costs associated with buying a property for the value of your pre-approved home loan.

Banks employ bond consultants who will sit with you and assist you in preparing a budget for you. In other words, establishing your Income and expenses and the subsequent net income that is remaining every month. Based on this amount they can calculate what loan you can afford. They will also conduct a credit check during the pre-approval application process.

The pre-approval home loan process also adds huge benefits, especially if the buyer’s paperwork isn’t in order. The pre-approval facilitates the preparation of the actual home loan application. The buyer also receives valuable advice from the bond consultant concerning affordability.

Pre-approval offers comfort for both the estate agent and the seller as it means that the buyer has the financial means to buy the property at the price they can afford.

It therefore facilitates a quicker sales transaction as pre-approval usually speeds up the actual home loan application process given much of the paperwork has already been done.

All in all, pre-approval can mean you moving into your new home sooner rather than later.