If you’re about to start house hunting and you have a preapproval in place, you need to check if that is a preapproval, or a fully assessed preapproval and here’s why.
A preapproval is relatively quick and easy, and in the past it was a great indication of how much you can borrow without having to go through every piece of information prior to finding a property you were interested in buying.
However of late, with so many changes to the industry I have seen quite a few clients with preapprovals in place fall through right when they needed it most, when they had 14 days to get a formal approval.
The issue is, when you get the pre-approval it is computer generated and just looking at two things. Is there enough deposit and income for the loan to be approved. When I see this fall over the most is if there is enough deposit but it isn’t considered ‘Genuine Savings’ or the income used is incorrect, perhaps 100% of overtime has been used or something similar.
A Fully assessed preapproval is exactly that. That is when a credit officer will look through the application and in most cases ask any questions they need to before making a decision on the outcome of the application.
This usually takes a bit of time to get in place however by doing it before you find a property, you save yourself a lot of stress and potential disappointment if any issues arise.
Once you have a fully assessed preapproval you then know you can confidently shop for homes in your budget and the only thing left to get you a formal approval is usually an updated payslip and a valuation on the property you are buying to confirm it is a security the lender is happy to use.
If you would like to buy your first home one day but have no idea where to start or how much money you’ll need make sure you register for The First Home Buyer’s Program and you’ll get all the information you need and more.