Securing a preapproval - Home buying success guide
Your journey begins with just a simple phone call where we'll talk about your current circumstances, how much you earn, any debts you have, and what you're hoping to achieve with your property. We'll then send you an email listing everything you’ll need for our next meeting so we can focus more on your property dreams and less on paperwork. At Buyvest, we’re dedicated to understanding your unique needs and laying a solid foundation for your property journey.
Your first meeting with Buyvest
During your meeting with us, your property goals take centre stage. We’ll listen attentively to your requirements, guiding you through loan options that align perfectly with your situation. You’ll be presented with a range of choices in detail so you can make an informed decision, and once you’re happy with your loan selection, we will then move forward with the loan application process.
Applying for your loan pre-approval
We will help you fill in all the forms and explain what other information we need from you to help us apply for your home loan with a lender. This collaborative effort ensures every detail is accurately handled. We will provide a Credit Guide, which contains important information about us, our credit licensing details, and our dispute resolution process. Then we will provide a home loan Credit Proposal, this is a comprehensive assessment of your financial situation and suitability for the loan, ensuring responsible lending practices and preventing potential hardship for you and your co-borrowers. We will send you these documents electronically to make signing easy, straightforward, and secure.
Bank checks your application
The lender’s assessment is a crucial step where they review your application against their credit requirements. This includes verifying your income, employment status, and conducting a credit check. The bank will also require you to sign a loan application form and where possible we will also send you this document electronically to make signing easy, straightforward, and secure. We will keep in touch with you every step of the way. Depending on the lender, this can take anywhere from a day to two weeks.
Conditional approval
A conditional approval is when the lender agrees to lend you money based on a preliminary assessment and meeting certain requirements. It isn’t a formal approval or commitment. Once we receive conditional approval from the lender, we will then take you through the next steps. This approval may list certain conditions that need addressing before an unconditional approval is granted. For many, property valuation is a common condition, which the lender arranges once you provide them with a signed and dated copy of the contract of sale.
Property valuation
The lender will want to know how much the property you are purchasing is worth. They will organise this valuation, which can take a few days. The three main valuation types are:
Bank Computer Valuation - an automated approach using recent local sales data.
Desktop Valuation - a remote analysis based on available photos and information.
Shortform Valuation - an in-person assessment by a professional valuer.
Conveyancer to review contract of sale
Have your conveyancer check the contract of sale prior to exchanging contracts for any unfavourable terms or conditions. This review should include checking for caveats, which are warnings or limitations on the property, and ensuring that all inclusions, such as fixtures and fittings, are clearly listed. The conveyancer will also look for any unusual clauses or conditions that could affect your ownership or use of the property. This thorough review helps prevent any surprises or legal issues after the contract is signed.
Organise building, pest, and strata report
Request your conveyancer to organise these reports during the cooling-off period. Building and pest reports are essential in identifying any structural issues or infestations that could affect the property's value or your safety. A strata report is crucial for apartments, villas, or townhouses, as it provides insight into the building's financial health, maintenance history, and any upcoming costs. These reports ensure you are fully informed about the property's condition and any potential risks, allowing you to make a confident and secure purchase.
Unconditional approval
This is a big moment! Unconditional approval means the lender is completely happy with everything and the loan is formally approved. We'll let you know when this happens and then the lender will send out the official loan documents.
Going through the loan documents
These documents include the loan offer and other important legal paperwork. It's a good idea to review these with us or your own legal expert, like a conveyancer. If it's just a loan refinance or a small loan increase, we can help you understand these documents.
Settlement day
The last step of the process is settlement. Once you’ve signed all the documents and sent them back to us, we’ll work out the final details. We’ll coordinate with your conveyancer, who will handle booking the date of settlement. Our team at Buyvest will ensure everything goes smoothly. Throughout this journey, remember, Buyvest is here to guide you every step of the way. With over a decade of experience, we’ll make sure your path to owning a property is as smooth as possible.
Frequently asked questions
How long does a preapproval last?
Most pre-approvals are valid for 3 months, depending on the lender. If your preapproval expires before you find a property, you can usually apply for an extension or renewal, though you may need to provide updated financial information.
Does applying for preapproval affect my credit score?
Yes, most lenders will conduct a credit check as part of the preapproval process, which creates an enquiry on your credit file. Multiple enquiries in a short period can impact your credit score, so it's best to be selective about where you apply. Working with Buyvest can help minimise multiple credit checks.
Can preapproval be declined?
Yes, preapproval can be declined for various reasons, including insufficient income, high existing debts, poor credit history, or unstable employment. If declined, ask for specific feedback so you can address the issues before reapplying.
Is preapproval a guarantee that my loan will be approved?
No, preapproval is not a guarantee of final approval. The lender still needs to assess the property you intend to purchase and verify all the information you've provided. Changes in your financial situation or issues with the property could affect final approval.
Should I get preapproval before looking at properties?
While not mandatory, getting preapproval before serious property hunting is highly recommended. It helps you understand your budget, strengthens your position as a buyer, and prevents disappointment if you find a property you love but can't finance.
Can I get preapproved with multiple lenders?
Yes, you can apply for preapproval with multiple lenders but be aware that each application typically involves a credit check. Working with a mortgage broker who can assess multiple lenders' criteria without multiple credit checks is often a better approach.
What happens if the property valuation comes in lower than expected?
If the valuation is lower than the purchase price, you have several options:
Negotiate with the seller for a lower price.
Provide a larger deposit to maintain the same loan-to-value ratio.
Seek a second valuation if you believe the first was inaccurate.
Look for a different lender who might value the property differently.
Consider whether to proceed with the purchase given the valuation.
Can I change lenders after receiving preapproval?
Yes, you're not obligated to proceed with the lender who provided preapproval. However, you'll need to go through the preapproval process again with the new lender, which takes additional time.
Does preapproval cost anything?
Many lenders offer free preapproval services, while others may charge an application fee. These fees are sometimes refundable if you proceed with the loan. Buyvest provides preapproval services at no cost to the borrower.
What if my financial situation changes after preapproval?
You should inform your lender or mortgage broker immediately about any significant changes to your financial situation after receiving preapproval. Changes such as switching jobs, taking on new debt, or experiencing income fluctuations could affect your final approval.
Why you should choose Buyvest!
With proper preparation and professional guidance, securing preapproval can be a smooth and empowering step towards achieving your homeownership dreams. Remember that a preapproval is not just a procedural formality - it's a valuable tool that provides clarity, confidence, and a competitive advantage in your property search. By understanding the pre-approval process, you're setting yourself up for success in one of life's most significant financial decisions. Ready to start your property journey?
Reach out to Buyvest today and take the first step towards your property dreams.
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Please note that the views and opinions expressed in this post are general information only, and this is not financial advice.
Any advice and information is provided by Buyvest Pty Ltd ABN 91 684 841 496, Australia Credit Licence No. 567392 and is general in nature, for educational purposes only and is not intended to constitute specialist or personal advice. This website has been prepared without considering your objectives, financial situation or needs. Therefore, consider the appropriateness of the advice for your situation and needs before taking any action. It should not be relied upon to enter into any legal or financial commitments. Specific investment advice should be obtained from a suitably qualified professional before adopting any investment strategy. If any financial product has been mentioned, you should obtain and read a copy of the relevant Product Disclosure Statement and consider the information contained within that Statement concerning your circumstances before deciding whether to acquire the product. You can obtain a copy of the PDS by emailing hello@buyvest.com.au. If you want to change your financial circumstances, such as applying for a loan, all loan applications are subject to credit approval.
All information on this website is subject to change without notice.
