Why you should get a Pre-approval in 2021
We’re currently in the midst of a particularly buoyant property market where interest is high and demand strong. Whether you are looking for a property to live in or as an investment, whether you want an established home or aim to build a new one, it is more than ever prudent to do your due diligence before diving in. This may mean getting a pre-approval underway as a priority.
Applications for pre-approval have always been relatively popular but we are now seeing more and more applicants choose to be pre-approved before embarking on their next purchase – and for good reason. Here’s why there is value in being pre-approved in 2021.
You know how much you can borrow
Having a preapproval in place will mean you will also have clear understanding of what your capacity to borrow is, which is a crucial factor in determining the price point you can consider. It will also ensure you are entering your property search fully armed with what your limitations are and help you stay focused on the task at hand.
Any potential finance issues can be resolved
Recent years have seen heightened scrutiny of applications by banks along with stringent lending policies rolled out that demand applicants satisfy more requirements to be approved. This has resulted in more delays in submissions being assessed due to the litany of questions that are frequently raised, sometimes for the simplest of reasons.
Getting your application pre-approved means you can mitigate delays in securing a full approval by having those queries satisfied sooner rather than later. It will also manage your stress levels by dealing with these often-frustrating requirements well before a contract is signed.
Bank service levels are currently slow
A hot market fueled by low interest rates and lender incentives has seen a spike in buyer interest translating into high volumes of loan applications. This large pipeline of submissions coupled with factors such as lenders operating remotely due to COVID-19 has meant service levels have been negatively impacted with many banks still trying to play catch up. Not being at the mercy of a looming finance date when submitting your application means that if it takes longer than expected there is nothing at stake.
You’ll have leverage when making an offer
A strong offer will bode well in the current market so having your application preapproved will stand you in good stead when you find the property of your dreams. Most preapprovals will be subject only to a valuation so both the vendor and realtor will hold an offer with a preapproval in place with high regard as they can assume that there should be no compelling issues obtaining finance and the road to settlement will be relatively swift.
It doesn’t cost anything
There is no financial cost to submit a preapproval, just some time and effort, with the bulk of heavy lifting being done by your mortgage broker. If you do not proceed whether it be due to a change in circumstance, not finding a suitable property or simply having a change of heart, the preapproval can either be withdrawn or expire without recourse.
If you don’t qualify you can work to fix it.
During the preapproval process you may find out that you are not in a position to obtain finance for any number of reasons. Whether it be income, deposit amount, current debt position or credit history that is holding you back, having your preapproval knocked back will let you know where you stand from a lending perspective and your mortgage broker will give you the information you need along with the tools required to improve your position to ensure you will be able to qualify in the future.
Looking to buy a new property in 2021? Before you start looking at houses, first look at getting preapproved as it may make your finance journey a little smoother and less stressful than if you choose not to. Talk to your Blackburne Mortgage Broker today for more information.