In The News

Wed 11 Sep 2019

Why Getting Pre-Approval Is Vital Before Buying a Property

Property & Real Estate
Bank lending, servicing rules and calculations are constantly changing. That is why it is important that you consult your Mortgage Broker or Bank to confirm what your borrowing capacity is before you start on your property search.



Over the last year, you may have heard a lot about the royal banking commission. Due to these investigations; there have been significant changes as to how the banks are assessing home loan applications. Lending rules have tightened, and this has resulted in changes to what Home Owners & Investors can borrow.

Bank lending, servicing rules, and calculations are continually changing. You must consult your mortgage broker or bank to confirm what your borrowing capacity is before you start on your property search.

Before searching for your dream home or investment property, it is vital to find out if you qualify for a loan. You can determine your borrowing capacity and get a pre-approval by meeting with a mortgage broker or visiting your local bank.

With a formal pre-approval, you can show that you’re serious when looking to buy a property sold at auction or private sale. Without this vital document, some real estate agents will not accept your offer as they don’t have any guarantee that you have the necessary funds to make a purchase.


Firstly, you need to provide your financial information. The required information includes your employment, income, savings, assets, and any debts, such as your credit cards or any other loans. Your proof of identification is also vital, and mortgage approval applicants need at least 100 points of ID to ensure lenders know you are who you say you are.

The personal details you provide will be evaluated by the lender to determine whether or not you can service the amount you want to borrow, i.e., can you meet the monthly mortgage repayments. They will decide as to whether you have the financial resources and ability to pay back the loan.

If you’re using a mortgage broker, several lenders and loan products may recommend to you. Your mortgage broker will then forward your application to the lender most suitable for your circumstances.

Remember, a pre-approval is just that. A full assessment of the property you wish to buy will still need to be undertaken by the bank. This happens once the bank receives a fully signed contract of sale.

It is important to remember that the lending policies of a bank can change, even if they have previously issued you with a pre-approval. So be sure to do all your necessary due diligence when you are looking to borrow money to buy a property.

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