What is loan pre-approval?

A loan pre-approval basically is a confirmation from a lender that you have the capacity to borrow a particular amount of money. To get pre-approval, you may need to submit documents showing proof of income, proof of deposit, monthly expense and credit statements etc.
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Getting pre-approval while not binding on the lender has a lot of advantages:
  • The pre-approval is FREE.
  • It remains valid upto 3 months.
  • It sets a limit and direction for how much you can spend
  • You will not face disappointment when you know exactly how much your borrowing limits are
  • You can negotiate better with sellers and agents once they see your home buying finances are on a sure footing
  • It show lenders and sellers you are serious about your intentions to buy a home and you will get better service
  • You can bid confidently at house auctions if your dream property comes on the market
Who can give you loan pre-approval?
The majority of banks and lending institutions will offer pre-approval without any charge and it will remain in place for 3 months (duration can vary from lender to lender). Your mortgage broker can help in getting you a pre-approval by presenting the best loans and lenders for your situation.
What is the amount you can qualify for?
The amount will depend on various criteria including your financial situation and lender’s conditions. You should discuss with your mortgage broker to get an idea of how much you can borrow depending on your income, goals and existing financial burden.
How does the lender decide on the loan pre-approval amount?
Lenders consider your income, credit history and monthly expenses before they decide how much they can pre-approve. Your mortgage broker should be able to offer suggestions as to your options. Book a FREE Consultation
What form does the pre-approval take?
The pre-approval is usually a certificate or letter declaring your loan amount has been approved and will be in place till a certain date. This document can be shown to real estate agents or sellers as prrof that your lender is willing to loan you the specified amount. This can also prove an effective bragaining chip during negotiations.