Before you start house hunting, getting pre-approved for a mortgage could be an important first step that could save you time and smoothen the process.
A pre-approval will determine,
• The maximum amount you can afford to spend on your house.
• Your repayments (fortnightly or monthly) associated with your maximum purchase price.
• What your rate will be for your first mortgage term.
This allows you to budget for your property purchase. With a pre-approval you’ll also be able to lock in a mortgage rate in case interest rates increase during your home search.
Applying for a mortgage pre-approval is free; it doesn’t commit you to one single lender. Getting pre-approved will guarantee that the mortgage rate you are offered by a lender does not change for 120 to 160 days. By “locking in” your rate, you’re protected if interest rates rise while you’re shopping for a home. If interest rates go down during this time, your lender will honor the lower rate.
Other benefits of being pre-approved include,
• Showing sellers and real estate agents of your commitment to purchasing a property
• With finance already arranged you have a better negotiating position, your offer will be more attractive and could help speed up application process ones you’ve located a house you like.
• As auction bids are unconditional you are required to arrange your finance before you bid at house auctions.
