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Secure Your Dream Property! Why a Pre-Approval is Essential

Are you planning to embark on a property shopping adventure? Before you start your quest for that dream home, here’s some invaluable advice: never go property shopping without a pre-approval! As experienced mortgage brokers, we emphatically recommend obtaining a pre-approval before you dive into the real estate market. Wondering why it’s so crucial? Allow us to shed some light on this important aspect of property purchasing.

What is a Pre-Approval?

Let’s begin with the basics. A pre-approval is a conditional approval from a lender, based on your financial qualifications, indicating how much money you can potentially borrow to buy a property. It’s essential to understand that a pre-approval is not a guarantee of obtaining a loan; instead, it serves as an estimate of your borrowing capacity, subject to certain conditions being met.

Why You Need a Pre-Approval

Securing a pre-approval can be a lifesaver, especially when you find that dream property you’ve always wanted. Picture this scenario: you bid at an auction without a pre-approval, and you emerge victorious as the highest bidder. But when you approach us for financing, you may encounter significant challenges.

Without a comprehensive understanding of your true borrowing capacity and other purchasing costs, you might find yourself unable to obtain finance to pay for the property. Despite your calculations, not all lenders may agree with your assessment, leading to potential loss of deposit and even legal repercussions from the vendor. Avoid this nightmare by getting a pre-approval beforehand.

Advantages of a Pre-Approval

Even if you’re not buying through an auction, having a pre-approval in hand offers numerous advantages. It demonstrates to vendors and real estate agents that you are a serious buyer with the financial means to make the purchase. In a competitive market with multiple buyers vying for the same property, this can give you a valuable edge.

Furthermore, certain lenders may lock in the approved borrowing capacity for a specific period, typically up to three months, regardless of interest rate fluctuations. This means that even if interest rates rise during this time, your borrowing capacity remains unaffected. However, every situation is unique, and to navigate the overwhelming information available, we recommend having a chat with our expert team.

Celebrating property purchase with pre-approval success

The Risks of Buying Without a Pre-Approval

Failing to obtain a pre-approval and purchasing a property can lead to precarious situations. If you commit to an unconditional or binding contract without securing finance, you are legally obligated to complete the purchase, irrespective of whether you can obtain financing or not. This could force you to come up with the entire purchase price in cash, which can be financially unfeasible for most individuals.

What to Do if You Find Yourself in a Bind

If you find yourself in such a predicament, don’t panic. Reach out to our team to explore alternative options. In some cases, we may be able to find a different loan product from another lender that suits your financial circumstances. Alternatively, you might need to consider alternative financing options, such as a personal loan or seeking assistance from family and friends. If all else fails, you may have to withdraw from the purchase, potentially losing your hard-earned deposit.

Get a Pre-Approval!

As specialists in finance, we firmly believe that obtaining a pre-approval before purchasing a property is an absolute must. It can spare you the heartache of being unable to secure finance, give you a competitive advantage in the market, and potentially safeguard your borrowing capacity for a specified duration.

So, if you have plans to buy a property soon, don’t wait any longer. Speak to our dedicated team, and let us help you obtain your pre-approval before you embark on your property search. Doing so may save you a significant amount of stress and worry, ensuring a smooth path to finding your dream home.