What Is A Home Loan Pre-Approval

When your lender pre-approves you for a home loan, they are giving you the go-ahead to search for properties. They are not committing to anything yet, but they will make things quick when the right opportunity comes up.

What is a home loan pre-approval?

Pre-approval is a conditional offer from a lender to provide you with financing for a property before you have actually found it. At this early stage, nothing is final, and the lender can still decline your final loan application.

Home loan pre-approval is a service that your My LMI Group broker can help you with. But first, let’s take a look at the benefits of getting pre-approved before you start looking for your dream home.

Why do I need pre-approval?

One advantage of home loan pre-approval is its ability to provide a clear estimate of how much you can afford to spend on your home. This allows you to focus on properties that are within your budget and avoid wasting time looking at homes that are out of your price range.

When you have procured a property, having your home loan pre-approved means that you can focus on pricing negotiations rather than juggling the stress of arranging a home loan at the same time.

Advantages of pre-approval at auctions

Pre-approval for a home loan could prove useful when purchasing at auction. While auction rules differ between states, there is usually no cooling off period at auction.

Getting pre-approved for a loan can help you to bid with confidence—you’ll have a clear idea of how much you can afford, and avoid being the highest bidder on a house you can’t ultimately afford.

How to get pre-approval on your home loan

Lenders offer pre-approval as a service to customers. The type of pre-approval available to you will vary. Your My LMI Group broker can help take the guesswork out of the process, allowing you to focus on your loan options without worrying about whether you’ll have enough money for a down payment or closing costs.

A lender will consider your credit history and current financial situation to decide if you are likely to make loan repayments. Pre-approval hinges on your circumstances not worsening between your application and purchase.

If you make a major life change such as resigning from your job to start a new business, you may find it harder to get approval for other significant changes.

It’s important to know that pre-approval for a loan doesn’t last indefinitely—it’s usually limited to a set period, often around three to six months.

Pre-approval costs nothing

You don’t need to pay anything to organise home loan pre-approval. Any fees associated with your loan are typically paid when your home loan is settled. With this small investment of time, it’s worth investigating if a home loan pre-approval is right for you.

If you want to get started in the pre-approval process but don’t know where to start, schedule an appointment with your local My LMI Group broker who can help you determine how to proceed.