It may be time to go shopping for a new home however, we recommend that you get your mortgage pre-approval early before you begin.
When it is time to purchase, before you go out shopping for your new home, most mortgage advisers would recommend that you get a pre-approval from a lender. A pre-approval will allow you to find out how much you will be able to borrow. You will know your price limit before you make an offer on a home.
Making an offer on a property before getting your finances in order and being fully aware of your options. This can often be incredibly stressful, leading to a disappointing, frustrating situation. Rushing to get finance arranged within time-frame specified by the vendor can sometimes mean you miss out on the property. You may also end up with an expensive mortgage that doesn’t really suit your situation.
If you have already started your house hunting –, we recommend that you contact your adviser and discuss a pre-approval. They may end up saving you a great deal of money. Arranging a pre-approval before you buy could eliminate wasting time and money on building inspections and LIM reports only to discover you cannot afford the home you set your heart on.
How Much Will A Pre-Approval Cost?
A pre-approval is an agreement from a lender stating the amount of finance that they will lend to you for the purchase of a property. You will still be required to meet the bank’s lending criteria and any conditions outlined in the agreement. You might be asked to provide a registered valuation, house insurance and to have the required levels of equity and security.
Lenders will often have different sets of requirements, this is why it is helpful to speak with your adviser as they can find the lender who best fits your personal situation.
What Should You Do?
While you can shop for a property without having a mortgage pre-approval in place. It is usually a good idea to contact your adviser first.
Your adviser is the perfect person to help you through the process.
A good adviser will outline everything that you need to provide. They will help you organise your finances and will be able to give you a good indication of how much you might be able to afford.
Direct to Bank or use an Adviser?
You can easily approach your bank directly. If you have a strong relationship with your bank and are lucky enough to have a great contact at the bank, (one who is familiar with your requirements). This may be a good option for you. You may find however, that you are limited to the financial products specific only to your bank. You will not get to see offers from other banks’ or lenders’ that may be more suitable.
Alternatively, you can speak to a mortgage adviser. Mortgage advisers provide advice to people who want a home loan. In most cases, (but not all) they will not charge you for their services. They are often paid a commission by the bank. Your adviser will be able to find the most suitable loan fit for your specific needs. They will also help you through the process of buying your home.
People lead busy lives. Many of us do not have luxury of spare time to shop around for the best deal. And, as is often the case of many first home buyers, you may find all the options a little daunting.
You may find that using a mortgage adviser like myself might be the best option for you.
What Do I Need to Provide You?
Some of the information you will be asked for is as follows;
Identification: You will need to provide two forms of ID, one of which needs to be photo ID E.g. passport or drivers license.
Proof of address: This could be an electricity or water bill – within the last three months or a bank statement.
Your Expenses: The lender needs to know this to ensure you can afford the mortgage repayments without hardship
Other Debts have: The lender will want to know about any debts you currently hold (other than your new mortgage) – This might include, credit cards, layby, vehicle loans or hire purchases.
Deposit: You will need to show that you have a deposit for your home – your adviser will provide more details around this especially if you want to use your KiwiSaver.
Bank Statements: You will be required to provide six months of bank statements – this will show the lender how well you are able to manage your finances.
Now What?
Once you have your mortgage pre-approval in place, you will know exactly how much you can afford. You can then start shopping for your new home within your budget.
As your adviser, I will also be able to outline the type of property and areas in which you can look at to help you meet the lending criteria.
If a pre-approval is something you would like to discuss further, then speak to me. I will be more than happy to help.
