Everything you need to know about getting a preapproval
5 min read
As we near the end of Winter, our attention turns to Spring in anticipation of the busiest time of year for the property market. Despite almost no new properties being listed on the market at the moment, we’re still getting a lot of enquiries from potential purchasers. The bulk of these are coming from first home buyers and upsizers. These clients all have one thing in common: they all want to be in a position to make an offer as soon as property listings start to increase as we enter Spring.
What is a preapproval?
A pre-approval is a document that confirms a bank is willing to lend you the money required to complete the purchase of a property. The bank provides this prior purchasing a property and there are usually conditions attached such as a signed contract of sale and valuation. You’ll then need to agree to purchase and complete these conditions before getting a full approval.
There are two different types of pre-approval that are available. The first is a system generated pre-approval and the second is a fully assessed pre-approval. The system pre-approval is usually done by a computer and take into account your credit score, income, job history and contribution. These are often completed instantly.
A fully assessed pre-approval is where an actual assessor from the bank physically reviews documents such as payslips and bank statements. This naturally takes longer given it is more detailed and thorough.
We usually recommend a fully assessed pre-approval for the majority of our clients. It is significantly safer and means there will be no surprises when going for full approval.
When should I get a preapproval?
As soon as you start looking for property, we recommend getting a pre-approval in place. This will ensure that you give yourself the best chance of purchasing your ideal property. It’s not uncommon for potential buyers to find a property that they like and then have to scramble at the last minute to get a pre-approval before an auction. Not all banks have fast turnaround times which might mean missing out on pre-approval and the perfect property.
How long does it take to get preapproved?
Great question. Some lenders are able to do this within hours, others take closer to 30 (or more) days. It all depends on what loan application volumes the lender is currently experiencing as to how busy they are. As a rule of thumb, I’d recommend giving yourself two weeks to get a pre-approval in place.
When does the preapproval expire?
Typically, a preapproval is valid for 90 days. After which time you are required to provide up to date payslips and bank statement.
Ready to get your preapproval sorted for Spring? Get in touch here or call us on 03 9421 1651.