Whether it’s your first home, investment property or you are upgrading, before you head out house hunting you need to know exactly how much you can afford.
If you are already pre-approved for a home loan, that’s a great start. However, just because you are “pre-approved”, it doesn’t mean you can go and place offers on houses willy nilly!
To prevent finding yourself in a calamitous position, make sure you understand what your “pre-approval” actually means.
Is your pre-approval in writing?
Make sure you have your approval in writing! We always get approvals in writing for our clients. Don’t take a bank’s verbal approval as gospel. We have seen them renege on these verbal approvals all to often.
Are there conditions in your approval?
Make sure you know exactly what the approval conditions are and understand your limitations! Get the approval in writing and know exactly what you need to provide to the bank and when, before you begin placing offers on houses. You need to be absolutely certain you understand the approval AND the conditions.
How can you make an unconditional offer?
If you are looking to place a cash unconditional offer on a house e.g. in an auction, make sure the bank has ticked off the property, including your proposed bid BEFORE you make an unconditional offer. Even with an approval, banks still need to be happy with the property you are buying, and have confirmed this to you in writing. So make sure the bank has seen and approved a draft sale and purchase agreement, and any disclosures on the property, BEFORE you bid!
Finally, make sure you get a quote for full insurance, in your name, before making any unconditional offer.
The underlying advice here is to make sure you have all approvals in writing. Make sure the bank has approved, in writing, any cash offer on the specific house you are offering on.
This process is a big part of our business, as it’s easy to get carried away in the moment. As always, contact us on 0800 000 517 for guidance.