Pre Approval

pre-approval_mortgage

A pre-approval is a full  assessment of a borrower’s financial situation. Documentation such as pay slips, bank statements, tax returns and financial statements of ABN   are collected and reviewed. Based on financial history, other documentation such as a divorce decree, bankruptcy schedules and discharge, business returns could be required. 

Once the property location ( Locality and surrounding is decided) you should start the process of getting the loan pre approval. This allow you to present your case to mortgage broker such as SLIMMONEY. The Mortgage Broker will find all the documents required. Provide you holistically financial service and help you apply for the lender of your choice.

The preapproval application preparation, to pre approval by lender can be three to four weeks. But these gives peace of mind to you in terms of how much you will be able to borrow and what will be your financial commitments. The preapproval also allows you to exercise constrain on you in auction situation as it can be vary draining.

The preapproval obtained also takes away any surprises you may have such identity theft, credit history issues and its impact on mortgage application, your ability to get one or other discount due to specific requirements of lenders.

The preapproval comes with some flip side such as you have already committed to one lender , you have already paid the some parts of fees, probably committed with loan type and features as well. Maximize your borrowing power, application amendment can be faster if financial situation changes such as promotion, bonus, gift from family etc.

Usually valid for 90 days but extension may be applied and granted for another 90 days based on your financial situation and lender.

Loan preapproval usually subjected to value of property. The advantage of preapproval is yo can start

  1. Search for property to buy
  2. Make verbal offer
  3. Bid in auction with knowledge
  4. Real Estate person if informed about preapproval status becomes more willing to show property as it shows your readiness.

 

 

Some facts about preapproval

Decrease credit card limits by $10,000 Increases borrowing capacity by  ~ $40,000

Eliminate $500 per month car loan payment increases borrowing capacity by  ~ $80,000

Eliminate $100 per month interest-free loan increases borrowing capacity by  ~ $15,000

One percent (1%) decrease in bank interest rates increases borrowing capacity by  ~ 10%

Eliminate $250 per month personal loan Increases borrowing capacity by  ~ $40,000

Increase salary( i.e. by reducing salary sacrifice)  by $10,000 per year increases borrowing capacity by   ~ $90,000

$20,000 p.a. O/T or commission income Increases borrowing capacity by  ~ $90,000 to $180,000

Replace $200/wk rent i.e. by moving into owner occupied home increases borrowing capacity by  ~ $150,000

$1,000 per month child maintenance Decreases borrowing capacity by( One more reason not to go for divorce) ~ $150,000

HELP debt, ( with salary of $50,000) Decreases borrowing capacity by  ~ $20,000 ( Pay off HELP debt as early as possible)

Disclaimer  the above information is not to be interpreted as providing specific financial advice. The examples given are broad in nature and are not representative of any one lender or group of lenders.

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