Buying a new home is exciting, but being realistic about your home loan pays off. Like most homebuyers you probably need to borrow money from a lender. Calculate how much you can borrow and provide the right documents to make sure your lender approves your loan application.
Why You Should Get a Pre-Approved Home Loan
When your loan gets pre-approved, you enjoy several benefits. With pre-approval, you:
- Know how much you can spend on your new home
- Shop around for home loans with more confidence
- Know how much your lender can give you, which protects you from disappointment down the track
- Bid with confidence at property auctions. You might also discover properties you wouldn’t have known about otherwise
- Let your real estate agent know you’re serious about securing a home loan. This may motivate them to work harder for you.
Lenders can pre-approve your home loan for up to 90 days. To learn more, talk with one of our mortgage experts.
How to Get Pre-Approval on Your Home Loan
You can do this without too much trouble, whether you’re a first-time home buyer or not. Here is what you must do:
- Give your lender accurate eligibility information
- Send your broker and lender all the documentation they need to verify your income, liabilities and security. Depending on the type of loan you want to get, they may also want to verify the deposit and your assets
- Pass the lender’s assessment. For this, you need a good financial history and good borrowing power. Also, remember that some lenders may carry out a new valuation of the property.
Some of the documents you have to provide include proof of deposit, monthly expenses and proof of income.
Why do Lenders Reject Some Applications?
Before you try to get your loan pre-approved, it’s good to know the most common reasons why lenders decline applications. Your loan application may not be approved if:
- You have a low credit rating
- You have made too many loan enquiries. Every home loan application you make shows up on your credit report
- You cannot provide the documents that prove your income. (However, low doc loans have different requirements)
- You have recently changed jobs, quit your job or are still on probation at your current job
- The lender has changed its home loan policies. (However, most lenders will give you pre-approval status if the change isn’t too significant)
- You try to borrow more than 80% of the property value but you don’t have a deposit
- Home loan interest rates have significantly increased since you sent in your application
- You have recently obtained another major loan.
After pre-approval, full approval is usually only one step away. However, be patient as this can take time. Often this is because they perform a valuation on the property you want to buy.
What to Do Next
uno can help you find an affordable home loan. We can help you calculate and compare home loans to find the right match for your needs. With interest rates so low, this is a great time to get a home loan. Get started now!
- Compare home loans to see all your options.
- Use our calculator to get an idea of your borrowing power.
- Talk to an expert to get the best deals and avoid extra fees.
This information is general in nature and you should always seek professional advice when making financial decisions.