Is your Pre Approval REALLY a Pre Approval?
When looking to buy a property the first thing you should do is confirm your borrowing capacity, by seeking a written Pre Approval for a loan from a suitable Lender.
Did you know there are two types of Pre Approvals? We call them “Electronic” and “Real” Pre Approvals.
Electronic Pre Approvals are assessed on data only. You submit an application via a Broker, Branch or online, and the Lender’s system will download your credit history and “score” it with their own algorithm. The system will also make a brief assessment of your employment history, assets, liabilities and your identification. If everything stacks up, they may issue a “Pre Approval” almost instantly.
But here is the risky part – They will check your borrowing capacity only based on the data you provide. If you tell them that you earn $100,000 but they cannot see that this includes superannuation, or some commission, bonus or overtime income, then your borrowing capacity will not be assessed correctly. If you are a self employed person, it is almost guaranteed that you won’t understand which of your financial figures are most relevant for that particular Lender. But you can submit an application anyway, and they will issue a written “Pre Approval” to you, but it will be “subject to” a full assessment, and with no guarantees whatsoever.
Therefore we ask in these situations, is that REALLY a Pre Approval that you can rely on?
Real Pre Approvals, provided by select Lenders, will do all of the above but with one major added benefit; A human Credit Officer will review all of the supporting documents you provide (e.g. pay slips, tax returns, bank statements etc) and they will work with you to ensure they fully understand your circumstances and provide you with a written Pre Approval that (in our opinion) would be far more reliable when seeking to bid at auction or make an offer on a property.
If you would like to know more about obtaining a reliable Pre Approval please do not hesitate to Contact Us for a chat.