The Reserve Bank’s emergency March cut to the official cash rate, and the prospect of another 0.25% reduction in April will most likely produce a bumper autumn for real estate markets across Australia.
With this situation in mind, those buyers who can organise their finances early will find themselves better placed when suitable properties hit the market.
In February, Australian housing values surge by 1.1% according to CoreLogic. With the most recent rate cut, it’s fair to expect March could produce an even bigger bump in values as more investors move money into real estate. Most investors are seeking stronger yields, which shares aren’t offering as fears about Coronavirus continue to grip equity markets globally. So, more people will sensibly move to bricks and mortar as it’s an asset class they understand and feel safe owning.
Lower interest rates will impact owner-occupiers too with the 'fear of missing out' (FOMO) sure to play a role in more numbers at autumn open for inspections and auctions. To assuage some of the potential FOMO anxiety, the savvy buyers and investors will invest time in securing a home loan pre-approval, also known as “conditional approval”.
A preapproved home loan is provided by all lenders and is an estimate of how much you could borrow for a home loan, provided you meet certain conditions. This approval is generally confirmed in writing with conditions clearly listed. Conditions could include paying an existing debt off, selling another home or providing additional documentation (such as a valuation of the property you’re interested in purchasing).
The process of getting a pre-approval is free of charge until you find a property and involves applying to your selected lender with the help of a finance specialist such as Our Broker who will check your finances and assess whether you’ll be able to repay a loan. If the lender considers you eligible, you’ll be granted conditional pre-approval to borrow up to a certain amount. Most financial institutions offer conditional pre-approval, which lasts for three months.
Gaining conditional pre-approval gives you the confidence to hunt down the perfect home and information about how much you can borrow. Also, a preapproved mortgage potentially makes you more appealing as a buyer by demonstrating you are ready to proceed with the purchase. Better still, the pre-approval process means you have done virtually all the work involved in nailing down a mortgage, and this takes out a major element of the FOMO involved in buying a property when markets heat up.
To start the preapproved home loan process, contact Our Broker today on 02 8232 0327.