The timing linked to a property sale can be a stressful period, especially if it involves accessing finance – so how long does a pre approval last?
Finance clauses in a contract of sale can be one of the biggest hurdles that stands between you and your dream home. Thankfully, obtaining the all important pre approval for a home loan is well within the control of a buyer, and is a process that’s almost always recommended in the current property landscape.
For first home buyers who are unfamiliar with the concept, pe-approved finance – otherwise known as a pre approval or a conditional approval for a home loan – is mutual understanding between a lender and a borrower. A pre approval is when the lender indicates that they are willing to lend the borrower up to a certain amount of money to fund the purchase of a property, ensuring that buyers have the capacity to make offers with confidence.
What Do Buyers Need To Get A Pre Approval
If you’re about to embark on your first foray into home ownership, it’s worth paying a visit to a mortgage broker. When applying for a pre approval, a lending institute needs to get a clear picture of your overall financial position, and whether they deem you to be a worthy mortgage candidate or not.
Pre approvals can take anywhere between a few days and several weeks to generate an outcome. As a general rule, the more complex your finances are, and the busier your chosen bank or lender is, the longer the process will take. If your application is incomplete, or your lender requires additional information about your financial position, then the process could take longer while the extra paperwork is processed.
Although each bank has a slightly different application process and relevant criteria that needs to be met, most will generally need to see documentation such as photo identification, bank statements, proof of savings, lists of assets and existing debts, proof of income, and a breakdown of your current living expenses. As they can compare multiple lending providers, mortgage brokers are able to help steer you in the right direction and ‘package’ your application to a loan product that best meets your needs.
Many first home buyers are often curious on how long does a pre approval last, and the good news is that once granted, a pre-approval is usually valid for around two to three months. After a pre approval expires, it is likely that you will need to present up-to-date documentation about your financial position, and start the application process again.
Why It’s Important To Get A Pre Approval
Imagine this: you’ve found your dream home and you’ve made an offer, only for the contract to fall flat thanks to your inability to get finance. This sadly happens all too often, particularly for first home buyers who may not have the experience in navigating the world of real estate.
Ultimately, making offers whilst armed with a pre approval doesn’t just give buyers a newfound sense of confidence, but it also helps to ensure that sellers take any offers made seriously. In addition, a pre approval gives buyers a set budget to work with, ensuring that they don’t get caught up with properties that they may not be able to afford.
In today’s highly competitive market, pre approvals can also shorten the settlement period in a contract of sale, meaning that buyers can get into their new homes faster. Finance clauses are one of the most influential factors in a contract of sale, and sellers may be more likely to pursue buyers who already have their funds sorted.
While pre approvals certainly do have advantages, it’s still important to keep in mind that pre-approved finance does not guarantee that a lender will lend you money to purchase a home, and is not the same as getting full, unconditional approval for finance.
As a general rule, pre approval is subject to certain conditions, one of which will often be that final approval is “subject to a satisfactory valuation”. What this translates to is that the lender will want to get a sense of the value of the property and how much you’ve offered for it, in order to decide if the loan is too risky and not a type of dwelling that they are willing to bet on.
As such, If you’re new to the world of pre approvals, your first stop should be a trip to your local mortgage broker – but where do you find one?
Partnering With Home Loan Professionals
Navigating the complex world of home loans has long been regarded as stressful, frustrating and time consuming – but if you can find the right advice on sourcing how mortgages work, then the good news is that it doesn’t have to be.
Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.
If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.