With interest rates and listings at record lows, the competition to land a new or next home has never been hotter, and in this market, having a preapproved home loan might be enough to give you the jump on other buyers.
According to CoreLogic, in Sydney, the monthly number of new listings added to the market has fallen by approximately 30% since the week ending 27 June, dragging total active listing numbers down by 13.7% below the five-year average. Similarly, the number of new listings added to the Melbourne market dropped by 27.0% between the week ending 11 July and 25 July.
To avoid missing out on your next or first home, its critical that buyers are well-prepared with a preapproved home loan organised through a financial specialist such as Our Broker.
What is a preapproved home loan?
All lenders will happily provide you with a preapproved home loan, which estimates how much you could borrow for a home loan, provided you meet certain conditions. They will start by looking at your proposed purchase price and tell you if you would qualify for a loan to cover that amount. Armed with this information a buyer can start looking for the appropriate home or investment property.
Usually confirmed in writing, this the approval lists all the conditions required for an unconditionally approved loan. These requirements could simply be a valuation of the property you’re interested or may include paying off an existing debt, selling another home or providing other additional.
The process of getting a preapproval is free of charge while you find a suitable property. The preapproval process also involves applying to your selected lender with the help of a finance specialist such as Our Broker, who will check your finances and advise you of the potential loan repayments and fees and explain the purchase process in detail so you can look for your new property with some certainty.
If the lender considers you eligible, they’ll extend conditional preapproval to borrow up to a certain amount. Most financial institutions offer conditional preapproval, which lasts for three months.
The valuable part of conditional preapproval is that it gives you the confidence to hunt down the perfect home and information about how much you can borrow. It can also take the mad rush away from seeking finance should you find the right property and are up against other buyers who have taken the time to get their finances in order.
Also, a preapproved mortgage potentially makes you more appealing as a buyer by demonstrating that you are ready to proceed with the purchase.
Better still, the preapproval process means you have done virtually all the work involved in nailing down a mortgage and will give you a better chance of landing a property in those markets where listings are light on the ground.
To start the home loan preapproval process or even if just want a sense of what type of property you might be able to afford to buy, contact Our Broker today on 1800 913 677.