So you’ve decided you want to get onto that much talked about ‘property ladder’ and you’ve already been busy trawling the net for the perfect home. Looking for a new home can be an exciting and challenging experience. After all, buying a home is one of the largest investments you may ever make.   
 
It’s good to keep a level head and be realistic about what you can afford. Most of us, when buying a home, will need to borrow money to finance the purchase. So before you go any further, you need to find out how much you can borrow.
 
It’s important to shop around and explore your options so you can find the best deals out there! Thankfully, most lenders have online mortgage calculators so you can get a quick idea of how much you can borrow by simply adding a few details. 
 
Once you have selected your ‘lending front runners’ give them a call to arrange a meeting. 
 
Before you make any big decisions don’t forget to seek professional advice.  Here at HomeSource we offer a specialised lawyer service which is very affordable. Click here and find out more.  
 
When applying for a pre-approved loan you will need to provide some additional documentation, such as: 
  • Proof of deposit
  • Proof of income
  • Monthly expenses and other outgoings such as loans, credit cards and store cards. 
 
As long as you meet the requirements then voilà - you will have a pre-approved loan. So now the real house hunting can begin…
 
What are the benefits of obtaining a pre-approval loan from your lender? 
  • Is FREE.
  • Is valid for up to 3 months. 
  • It gives you clear guidance on how much money you can spend. 
  • You won’t be setting yourself up for disappointment if you think you can spend more than your lender agrees to lend you. 
  • It allows you to shop with confidence and bid at auctions should your dream home come onto the market. 
  • It shows your estate agent that you are serious about buying a home. Some agents won’t spend their time showing you homes in-case you don’t come through with the financing.
What are the conditions of pre-approval?
 
  • That all information supplied to the lender for assessing eligibility is true and correct.
  • That the lender has received all documentation necessary to verify deposit, security, assets, liabilities and income.
  • Verification of the personal and financial details.
  • The lenders satisfactory assessment (including a valuation) of any property offered as security for your client’s loan(s).
  • Whether Lenders Mortgage Insurance is required. If it is required (generally when the loan amount is for more than 80% of the value of the security property) the loan(s) will be provided only if the insurer agrees to provide the insurance. The borrower will also need to pay the Lenders Mortgage Insurance premium.
Once you’ve found your dream home, you will then need formal approval. Full approval of your loan can take as little as an hour or it may take a few days if valuations are required. 
 
But before you apply for a pre-approved loan, make sure you are fully aware of the reason why loans are rejected. This way you can ensure you meet the criteria before applying – the last thing you want is lots of different loan applications appearing on your credit report! 
 
What are the common reasons an application would be declined? 
 
  • You can’t properly document your income. 
  • Your credit rating is low. 
  • You have too many enquires on your credit file. All your loan applications will appear on your credit report. If there are too many this may you’re your lender nervous as they may think you are not telling the full story. 
  • Your situation has changed, for example you have recently changed jobs or got another type of loan. 
  • The policy of the lender has changed. Some lenders will honour pre-approvals that are lodged before their policy changes. 
  • Interest rates have increased; this as a consequence that the maximum amount that can be borrowed will decrease.
  • If your loan amount is more than 80% of the property value.  
 
So remember when deciding to take that leap of faith - along with 9 million other Australians who have already jumped on the property ladder, just remember to be prepared! 
 
You need to take all your decisions seriously and take the time prepare yourself through every aspect, so that finding your dream home a positive and pleasant experience rather than a negative one. 

It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan