How to get pre-approved for your mortgage
When you miss out on your dreams because your credit card is declined at the checkout, heartbreak hits.
But what if the same were to happen with that dream home you’ve had your hopes on buying?
When looking to purchase a property, there’s a reason that home seekers with loan pre-approval are taken more seriously than those without; their lender has indicated how much they can borrow by comparing their income, expenditure, debts and liabilities with their lending criteria.
So when it comes to making an offer on a home, it’s no surprise that a potential buyer with pre-approval is more promising than someone without financial security.
Here’s how YOU can get pre-approved for a home loan – and what to know about recent changes to the process.
Honesty is key
When it comes to seeking approval for a mortgage, there’s no point trumping up your financial position or not declaring all your expenses; you’ll just be over-borrowing on a loan that you’ll struggle to make future repayments on. Be honest about your credit history and upfront about any concerns you have with your lender – and while your limit may be lower than initially expected, there could be things that you can change to make a stronger case for the loan you need down the track.
Part of planning for a successful pre-approval is living as though you already have a mortgage, according to Finance Specialist at MoneyQuest Craig Corbett. “Bring your spending back to what you would spend if you already had the loan and the cost of maintaining a property… this will give you an idea of what you can afford to repay, and will show the lender your real borrowing capacity.”
Planning ahead will also leave time to correct any potential red flags with your credit score, such as new credit cards, late payments on bills or cash advances.
Prepare what you need
Lenders must now make reasonable inquiries into the living expenses of applicants, so be sure to have ticked all the boxes on what you need to show for the application. This may include 3 months’ of bank statements as evidence of phone, health or car expenses, as well as entertainment or other living expenses. As every lender has their own policy, call up beforehand to ask if you’re unsure.
Be aware of current lending criteria
As this changes all the time, it doesn’t hurt to do a quick Google search of what lenders are looking for at the time that you intend on applying. Transactions such as Afterpay and Zipmoney are two examples of current short-term forms of debt that many lenders are looking into, according to Craig Corbett. To avoid disappointment, be sure to have a quick look over bank statements for any spending or transactions that you may not be immediately aware of.
After home loan advice?
Get in contact with Prudential Real Estate or speak to Craig Corbett at MoneyQuest today!