FIRST HOME BUYER PRE-APPROVAL IS GRANTED – WHAT NOW?
So, you’ve been issued a pre-approval to go and buy a house.
If you’re like most first home buyers, you’re probably scratching your head thinking, what does that actually mean? What now?
Well, you probably know the next step is to go and buy something, but what about all the important details around like, “What’s my maximum purchase price?” or “When do I get a conveyancer involved?”
My name is Will Bell, and today we are going to jump into what comes next once you’ve got the pre-approval, which I’m going to put into three phases.
To give you a quick overview, phase one is lining up your ducks. Phase two is “sign me up”, which is basically when you’ve bought your property. Phase three is “make it legit”, which is to formalize it in the form of a home loan approval.
Let’s get into it!
PHASE 1: LINING UP YOUR DUCKS
So, phase one is lining up your ducks.
Firstly, you need to know a couple of basic things.
What are the basic things I need to know once I have pre-approval?
You need to know your purchasing limit. Your pre-approval has your maximum loan amount.
That’s entirely different to what you can actually spend up to, so you need to be aware of this.
If you just add your savings plus the loan amount, sometimes that’s not right because you may not have taken any expenses into your calculations. So, it’s always best if you understand that your mortgage broker should be able to help you there.
The second one is to understand your timeline, because generally different lenders have different timelines around pre-approvals.
Generally, you’ve got three months from when the pre-approval’s granted. That means you actually need to buy something within that time frame. But you can’t just wait till the 89th day to buy something because it doesn’t give the bank enough time to assess it.
Usually the ideal timeline there is two to three weeks before pre-approval expiry by the time you’ve signed the contract, so the rest of the process can happen in the remaining days in order for you to get approved. Anyway, we’ll go into that later on in this video.
The next important thing is,
Do you need a buyer’s advocate?
A lot of people don’t know what a buyer’s advocate is, so let me say that they are the ones you hire to help buy the property.
What are the benefits of having a buyer’s advocate?
Well, a buyer’s advocate will access off-the-market properties. There is a short supply on the market and a lot of properties are getting sold-off-market – that means they get sold before you see it listed on realestate.com.au or domain.
So the buyer’s advocate is able to do all the hard work such as searching the property for you, call all the real estate agents and find a property that suits you. He does the negotiation and all the legwork which will suit you if you’re a busy person or you’ve been searching for a while and for whatever reason you can’t find what you’re after. The best thing is you’re not competing against the rest of the open market.
Do I need a conveyancer when buying my first home?
The next one to lining your ducks in a row is have your conveyancer teed up so that they can inspect the contract prior to you signing up.
That will protect you from any funny business going on and make sure you’ve got a building and pest inspection.
By the way, what I mean by they’ll protect you from funny businesses is they’ll make sure they’ve written the clauses in a way that benefits you rather than the vendor or the seller.
They’ll be able to appeal through the section 32 if it’s a Victorian property, and the section 32 is a lot of information about the property that legally the seller is meant to provide. So, the conveyancer will have a look over that and let you know if there are any issues there.
Do I need a building and pest inspection when purchasing a property?
As I said, also make sure you’ve got your building and pest inspector ready prior to signing, just so you’ve got some idea of their availability as well, because sometimes they’re booked out or they’re on holiday.
I would still hire a building inspector even if it is a new property because you just don’t trust the work that’s been done these days. Unfortunately, that’s the times we live in – we can’t be a hundred percent sure what’s structurally wrong with an established property and if it’s affected by the terms you are not covered by insurance.
One tip, I wouldn’t recommend hiring any professional that’s been referred by a real estate agent. I’m not trying to make any accusations or anything here. I think it’s just better safe than sorry, and I’ll leave it at that.
So just to rephrase in getting your ducks in a line, you must understand your timeline, understand your purchasing power, get a buyer’s advocate if you need one, get your conveyancer ready, and hire a professional building and pest inspector.
If you need credible people with that, you can get in touch with me and I can get you in contact with the people that I’ve used personally for a number of years now.
PHASE 2: SIGN ME UP!
So, now you’re ready to go and buy a property.
I call this the “sign-me-up” phase which is basically, you can go and start looking for a property and start negotiating.
Well, I can’t help you much in the negotiation process, that’s why you need to have a buyer’s advocate.
Once you’ve negotiated with the agent and agreed on terms – the price, finance clause, building inspection, settlement time, etc. – your conveyancer will look through the contract to make sure everything’s worded correctly. You sign the contract, then it goes to the broker.
PHASE 3: MAKE IT LEGIT
Phase three is “make it legit”.
The broker will send the contract to the bank and they’ll seek to get full approval.
Just to dig a little bit deeper so you are fully clear, part of this will be the bank valuing the property. Once they get the contract, they may also want additional documents. They may ask for payslips, bank statements, updated documentation as the documents already provided may be a bit old.
For example, there may have been things on the original pre-approval that they mentioned they will want upon assessing for the full approval, which your mortgage broker will have already talked to you once the pre-approval was issued.
So assuming that process goes all fine, the bank’s happy with evaluation and everything, we move on to approval and that’s it. You’re done. Congratulations, your loan’s approved! That’s the major milestone.
The rest will be the solicitors, the vendors and the banks sorting everything out for you.
You should just rely now on your mortgage broker and conveyancer to ensure the rest of the process gets done, then you get to settle on your new home smoothly.
Get in touch with us
If you need any help or mortgage advice, then I suggest to book a time with the team here at Will Bell Mortgage Broker. We’ll be happy to assist you if you are having questions about your pre-approval process. Cheers!
Will Bell
Will Bell has 15 years’ experience in the finance industry, the last 11 years he has owned and operated Will Bell Mortgage Broker. He specializes in residential home loans and over the years has carved out a trusted brand. This is proven by the reviews his customers have made regarding the service and the experience he has provided.
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