Canberra & Perth

Formal and pre-approval

Pre- approval

Home loan pre-approval, commonly referred to as conditional approval, signifies a lender’s provisional agreement to provide a borrower with a specified sum for a home loan. Prospective buyers often pursue home loan pre-approval when they begin their property search.

The pre-approval process necessitates the fulfilment of two criteria:

1) the loan amount; and.

2)the loan-to-value ratio (LVR). It is imperative that we ascertain buyers’ compliance with these requirements, particularly their financial standing, during the pre-approval stage.

Advantages of Obtaining Home Loan Pre-Approval

  • Pre-approval provides clarity on your borrowing capacity, enabling you to confidently make offers on properties within your budget or participate in auctions.
  • Certain vendors prfioritize pre-approved buyers due to their potential for quicker settlement, enhancing your attractiveness as a buyer.
  • With a typical validity of 3-6 months, pre-approval periods can often be extended through discussions with your lender or broker before expiration.
  • Obtaining pre-approval usually incurs no fees, making it a financially prudent step in the home-buying process.

Drawbacks of Home Loan Pre-Approval

  • The pre-approval process demands a comprehensive set of documents, similar to a formal approval. These include identity verification, recent payslips, PAYG summaries, and documentation of current assets and liabilities.
  • Each pre-approval application is recorded as a credit enquiry on your credit history. Applying with multiple lenders simultaneously can signal that you have been previously rejected, potentially raising concerns among lenders.
  • Pre-approval is only valid for 3-6 months. If you are unable to extend or miss the extension deadline and are not ready to purchase a property within this timeframe, you may need to reapply.
  • Pre-approval is not a guarantee. Changes in your financial situation or alterations to the lender’s policies could result in the denial of your home loan application.

Required Documents for Home Loan Pre-Approval

  •  Identification Documents: Australian Driver License, or Government issued Photo ID and Visa if non-AU citizen.
  • Income Documentation: Typically, payslips.
  •  Liability Evidence: Most recent statements for car loans, personal loans, student debt, and other unpaid liabilities.

 

Is there a possibility that your pre-approval could be declined?


Yes, it’s possible for your pre-approval to be rejected. Common reasons include:

1. Low Credit Score/Poor Credit History: This is a critical factor, especially if your credit history shows late repayments or defaults, which can significantly impact your chances of approval.
2. Submitting to the Wrong Lender: Different lenders have different policies and target clients. If the broker submits your application to an unsuitable lender without understanding their policy, it may result in rejection.
3. Insufficient Financial Advice: If you submit an application without receiving adequate financial advice, the application might not align with your financial situation, leading to a potential rejection.

Our 99% Approval Rate:


We strive to ensure your application gets approved. Here’s how we address common issues:

  • Low Credit Score/Poor Credit History: We can guide you on improving your credit health. Regular and accurate information on your credit report helps, along with paying down existing debts when possible.
  • Expertise with Multiple Lenders: We have access to 30-40 lenders and are familiar with their policies. We can give you suitable advice to submit your application to the right bank.
  • Comprehensive Financial Advice: We provide appropriate financial advice to ensure that your application aligns with your financial situation.

Certain situations are beyond our control and may lead to denial:

  • Fraudulent Documents: Submitting fake documents is a significant violation and results in immediate rejection.
  • Criminal Activities: Involvement in money laundering or ID theft can also lead to rejection, as these activities violate legal and ethical standards.

 

Our mission is to provide trustworthy, knowledgeable guidance to help you secure pre-approval for your home loan. Your financial health and credibility are paramount, and we’ll strive to assist you every step of the way.

Formal/
Unconditional Approval for Home Loans

Unconditional approval signifies that the lender has approved your home loan application without further requirements. This represents the bank’s formal commitment, unless the client is:

  • Submitting fraudulent documents
  • Involved in ID theft
  • Engaged in criminal activities

Unconditional approval is the lender’s final decision to approve your loan. It means they’ve considered all your details and are willing to lend you a specified amount to purchase a particular property. This is also known as ‘formal approval’ or ‘full approval’, and these terms are interchangeable.
Unconditional approval differs from ‘conditional approval’ (or ‘pre-approval’), where loan approval is contingent upon meeting additional criteria.

What Does Unconditional Approval Look Like?
Unconditional approval is typically presented in the form of an offer letter, which outlines detailed terms and conditions. The offer letter will cover key aspects of your home loan, including:
– The loan amount
– Your annual interest rate
– Your repayments on a monthly, fortnightly, and weekly basis
Even with unconditional approval, you should look for phrases such as ‘subject to further bank requirements’ in the conditions. This indicates that lenders can still revoke the loan if certain conditions are not met.