Step-by-step guide to getting mortgage pre-approval

Preparation is everything right now in the housing market, with stock low and many buyers competing for each property. With sellers having a choice of offers, being able to say that yes, you have your finances in order, is going to make you far more appealing as a buyer than people who need to talk to their bank first. 

Here’s how to get your mortgage pre-approved so you can put your best foot forward when you find your dream home. 

Decide on a lender

First of all, you need to work out who you’ll take out a mortgage with. While you may want to stick with your existing lender, right now it’s a good idea to shop around a little to make sure you’re getting the best possible deal. With interest rates currently so high, it’s important to do your research here. 

You can either go straight to a bank, or to a mortgage broker, who will offer you loans from the entire market. Canstar is a great comparison website that financial advisors often recommend to give you an overview of the market. 

Alternatively, speak to your broker, or we can recommend one for you. 

Gather up all your paperwork

Next, you can start applying for a loan once you have all of your information to hand. Many banks and brokers let you apply online, or you can make an appointment.  

Most importantly, your lender or mortgage broker will want to see evidence of your income. This may be payslips if you’re employed. If you’re a sole trader or run your own company, most banks will want to see tax returns and a notice of assessment for the last two years, at least. 

You’ll also need to be open about your debt and other expenses. This can include HECS debt, credit cards and personal loans, and all of your living expenses. Your lender will look at these to work out how big a loan you can realistically qualify for, and what your repayments will be. 

If there’s anything you can pay off, such as smaller loans, now is a great time to do so. The lender will also check your credit score to determine whether to approve your loan, how much to lend you, and what your interest rate will be. You can check your credit score online, and if it’s on the low side, there are things you can do to improve it, such as paying bills on time and reducing credit limits. 

The bank will also want to know about any assets you have. These will add to your borrowing power and give lenders a fuller picture of your financial situation. Assets include property, superannuation, investments, a car and any savings you have.

Finally, you’ll need to prove your identity with a passport or birth certificate. 

Review your offer

Once you’ve submitted your application for pre-approval, the bank will review your finances and make you an offer in writing. This will be valid for a set period of time, usually 90 days. However, bear in mind that It’s no guarantee that they will lend on the particular property you want to buy. They will still want to review the property, and may adjust their offer accordingly. 

Are you thinking of selling or buying? Get in touch with HPA today.

Having pre-approval in place makes you far more appealing to sellers, as they can feel confident that you are a serious buyer and are ready to move. Whether you are looking to sell or buy, feel free to give us a call so we can get the ball rolling.