Why getting a home loan pre-approval is the smartest decision you’ll make

Imagine for me, if you can, that you’ve been on the phone to Telstra for an hour.

I know! Such torture. But bear with me.

You’re on hold, and you’ve been informed that your position has progressed in the queue. You’re about 5^th in line, and you’re getting really annoyed with the classical music.

And then all of sudden, you’re second in line.

And then your phone battery dies.

All of that time wasted, simply because you weren’t organised enough to charge your phone. Simple mistake, right?

I didn’t bring up this scenario to torture you.

Not getting prepared for your home loan is a lot like leaving your phone uncharged. Eventually, you get cut off.

And how do you best get prepared for your home loan so you don’t get cut off in the queue?

You get home loan pre-approval.

 

Why do you need to get pre-approval for a home loan?

Buying your first home is a process. You’ve committed to that place you love, but you’re in limbo hoping that the bank sends that home loan approval letter, internally screaming “Pick me! Pick me!”

Just like when you’re on the phone to Telstra, the person who’s best organised makes it through to the end.

So, if you want to shorten the settlement period and actually score that dream home, you need to get home loan pre-approval.

 

How to get home loan pre-approval?

There are two types of home loan pre-approval, and one of them is a dirty rotten lie.

 

Why instant mortgage pre-approval are a lie?

Type in ‘mortgage pre-approval online’ and you’ll be told “it only takes two minutes” by a website that we won’t name.

This is a lie.

You can’t get mortgage pre-approval that quickly because a bank needs to actually assess your financial history, your credit score and current financial state of affairs. This takes a lot longer than two minutes!

This isn’t a commitment from the bank, but more of the first step for a lender or broker to contact you, and follow up further.

I commonly get customers who’ve been told by a bank that they’ve been conditionally approved, only to find out their guarantee counts for nothing.

 

The home loan pre-approval process

A full Pre-Approval is also called a Conditional Approval subject to you finding a property. This means the bank is happy with everything about the loan (incomes, deposits, credit history, and other major questions your lender will test you on). All you need now is a property that meets your budget.

And it’s not just a matter of receiving a call from Karen at Commbank. Nope, you need an actual, physical, hold-in-your-hands-type letter, otherwise, you won’t have a leg to stand on.

 

Here’s a secret – it’s up to you to get pre-approved for a home loan

Your mortgage broker can’t get you pre-approved for a mortgage.

Nor can your lender.

It’s actually all down to you.

You see, seller and lenders want someone who can finance the loan. They want a financially sound person who’s ready to take on the responsibility of home ownership for the next 20 years.

They want a person with a good credit score, substantial, genuine savings, and a steady income.

Of course, your mortgage broker is happy to sit down with you and explain how everything works, like a Sherpa leading you into the land of home ownership.

But the actual strategy and financial fool-proofing that you need to get approved for a home loan?

That’s all on you.

In summary

When it comes to buying a home, it’s often a matter of first come, first served. Or better yet, first come, best prepared, then first served.

But of course, you don’t know what you don’t know. That’s why having an honest mortgage broker on your side is so useful.

Get genuine advice without the hardcore sales dribble, and you’ll be on your way to home ownership in no time.

Andrew Evans is the Owner of Mortgage Guy