One of the first and most vital steps in your home buying journey is to learn how to get a home loan pre-approval. Getting pre-qualified for a home loan before you begin your journey is one of the best ways to ensure it’s a smooth transition from renting to homeownership. Darren Walters has been working in the property market for more than 20 years and has helped thousands of renters get out of the rental market with his no or low deposit new home system.
As the first step, getting your borrowing capacity and pre-approval is a fantastic way to understand your factual new home options. Our New Home Specialists will work with you to go over your financial situation and how we can get you into your new home. Complete our simple pre-qualification form to start your homeownership journey today.
What is Home Loan Pre-Approval?
Also known as conditional approval, home loan pre-approval is typically done through an online application. That will then tell you what your borrowing capacity will be. When you receive your pre-approved borrowing amount, you’re “approved in principle”. This means, if your financial situation matches the information received during the pre-approval process, your final approval will closely match the pre-approved amount. If during the credit check any additional information arises, that will impact your borrowing capacity, and your borrowing amount may change.
When you start house hunting, it’s easy to start imagining every home as your dream home. However, without knowing your financial situation, you could be searching in all the wrong places. When trying to get into the property market, you need to know if the house you’re looking at is a realistic option for you. This is the benefit of a pre-approval. When you go through Darren’s pre-qualification system, you’ll know exactly what your borrowing capacity will be using our no or low deposit new home system. This lets you focus on new home options that are in your price range.
One of the biggest benefits of Darren’s pre-qualification system is that it allows our New Home Specialists to accurately assess your new home options, without impacting your credit score. This means you can fully understand your options without harming your chances of getting approval in the future.
Are There any Downsides to Getting a Pre-Approval?
Different lenders have their own pre-approval process, and the methods used by most will negatively impact your credit history. Having multiple pre-approvals on your credit file in quick succession with multiple different companies can give lenders the impression that you’re an unstable investment. While this shouldn’t discourage you from becoming pre-approved for a home loan, it is something you should be aware of if you plan on going to multiple lenders.
No1 Property Guide operates a little differently from the banks. Darren Walters’ pre-qualification system replaces the regular pre-approval, but it won’t impact your credit score. We’re able to do this thanks to Darren’s 20 years’ experience with banks and lending policies. Using the No1 Property Guide pre-qualification process, you can discover your borrowing capacity quickly and, in the event it’s lower than you’d like, our New Home Specialists can create a plan to help you improve it so you can get into your new home sooner.
What Do I Need for Home Loan Pre-Approval?
When you go through the pre-approval process, the lender will examine your overall financial situation. To show your financial position, you’ll have to provide evidence of your income, debts, and liabilities. The kind of information you’ll need to provide includes:
- Proof of identity
- Proof of assets
- Documentation of current debts & liabilities (including loans, expenses & credit cards)
- Deposit amount
- Family situation
The lender will then analyse your documents and financial history and you’ll receive your pre-approved borrowing capacity.
Should I Get Pre-Approval When Applying for a Home Loan?
It’s not a necessity to have a pre-approved borrowing capacity before you apply for a home loan. But at No1 Property Guide, we always use pre-qualification as our first step for a couple of reasons. When you know your borrowing capacity, you can focus on the homes and areas that are in your price range. With how competitive the housing market is, many estates and developers won’t accept applications without pre-approval from a financial institution. Being pre-qualified helps speed up the process of securing final approval. Meaning construction can begin quicker, and you can get into your new home sooner.
Does This Guarantee Me a Home Loan?
Put simply, no. It’s important to understand that getting pre-approval doesn’t mean you’ll definitely get a home loan. A pre-approval is an informal start to the application process. The information used for pre-approval and final approval are similar, which results in a similar borrowing capacity. However, some lenders have different policies when it comes to final approval and may change what ‘you can borrow’ even if all your details stay the same.
One of the biggest reasons a pre-approval can fall over is changes in your financial situation. When you get pre-approved or pre-qualified, it’s based on the information and financial situation at the time. If you go and get a loan, quit your job, or have kids, your situation will change. So, ensuring you keep your situation the same once you’ve been approved is a must.
How Long Does Pre-Approval Last?
Talking generally, the pre-approval stage will last between 3-6 months. This will depend on the policies of the lender and if your financial situation changes. If your circumstances do change, then your pre-approval may no longer be valid. Some of the factors that can impact the validity of your pre-approval include:
- Taking on new credit cards or loans
- Change in work circumstances
- Spent your deposit
- Having children
- Undisclosed debt or liabilities
Of course, most lenders won’t offer a guarantee on how long a pre-approval will last as there are so many variables.
How to Get Pre-Qualify for a Home Loan?
This is the easy part! The easiest way to get pre-qualified for your new home is to complete our simple pre-qualification form. By answering some basic questions, you can easily discover your borrowing capacity in as little as 24 hours.
Darren Walters has been helping renters get into their own home for more than 20 years. And he understands the ins and outs of the property market. By combining his knowledge of property, and his no or low deposit new home system, No1 Property Guide can help you secure your dream home sooner. Contact our team to begin your homeownership journey today.