The submission of all your documents to the bank in order to get an ‘approval’ prior to finding a house. Or in other words, an O.K. from the bank to say “we will approve you when you find a house, (as long as the house is ok.)”

What types of pre-approval are there?

1. System pre-approval – Data is keyed in, hit a button and the computer decides roughly if it will be ok or not.
2. Fully assessed pre-approval – We submit all data and documents to the bank where it will be looked at by a credit assessor.

Avoid the first type. It’s usually not worth the paper it’s written on and it’s most commonly done in bank branches to save time. It kind of defeats the purpose as no one is reviewing it and has many disclaimers to protect the bank if it’s relied on to buy a house. We prefer the second option although it is more work, it gives you and our team the peace of mind that everything has already been looked at, no nasty surprises down the track.

Why do I need one?

1. To give you a fighting chance of even getting a property. Right now we are in a seller’s market, some properties are receiving up to 15 written offers! How do you stand out from all the other offers? By telling the agent that the bank has already checked over everything and you are “Pre-approved.” This gives them confidence that your offer is not wasting theirs or the sellers time. (A surprising amount of people who have no chance of getting a property waste time making offers that won’t go anywhere!)
2. To participate in an auction (or make unconditional offers), you definitely need to know that you are going to be approved. A pre-approval that has been fully checked by the bank and they’re just waiting on you to find the property is about as safe as it gets.
3. Iron out any bugs or issues BEFORE the stress of finding a property. We see it all the time, defaults that people were not aware of, issues with employment that hinder people from getting loans. It is best to have this sorted without having the added pressure of your dream home waiting for it to be fixed.

How do I get one?

First, we organise a detailed conversation to understand where you sit financially and personally.

Then our team will request all the documents we need to finalise our research and recommendation prior to us having a meeting where everything will be discussed in full, which banks we recommend and why. What your borrowing capacity and the maximum purchase price is.

This may mean lodging for the pre-approval now. It might mean setting in place for a 3 – 6 months plan to get ready for pre-approval.

Either way, your broker is here for the long run. Talk to us about setting up a time to discuss how we can get you pre-approved, so you can buy with confidence.

- Tony van de Kerkhof