If you’re looking to buy a home, getting your finances in order and having a mortgage pre-approved is essential to help avoid disappointment. It means you’re really clear on how much you’ve got to spend which in turn can help guide your property search.
But did you know there are different types of pre-approvals? Here’s our guide.
A basic pre-approval home loan
A basic preapproval is handy to help you check your eligibility for a mortgage with a particular lender as you can seek preapproval easily online from most institutions. But note, that it’s a guide only and not a formal agreement. So don’t rely on it as a guarantee of funds. You might want to do some more homework before you start bidding at an auction!
A conditional pre-approval home loan
This preapproval is also known as an approval in principal or an indicative approval. It means that your lender has generally assessed your circumstances and is likely to approve your loan. This is helpful to allow you to start bidding on properties and making offers. But note, it is still not an absolute guarantee and further, more detailed assessment will be required once you’ve found the right property.
Unconditional pre-approval home loan
This is a solid indication that the lender will provide you with a loan for a specific property, as it is based both on your own circumstances and the bank’s assessment of the property itself. From here, you begin the formal application process.
Know your options
Though it is often easier to apply for pre-approval with your existing bank, it is usually worth while to thoroughly research your options before you make a formal mortgage application. Consider using a mortgage broker as well as approaching your bank. Or if you would like to speak to our accredited mortgage specialist, we’d be happy to help.