The simplest (and smartest!) way to organise finance is through a mortgage broker. If you're not familiar with what a mortgage broker is, simply put, a mortgage broker:
- Is specifically trained in mortgages and knows how to structure your loan to suit your goals
- Has access to dozens of lenders, and will save you having to research literally hundreds of options
- You’re more likely to get the mortgage that is right for you
- Acts as your own personal banker, guiding you through every step of the home loan process
- Will be your broker for life! You’ll receive ongoing help and advice whenever you need it during the life of your loan
Most importantly though, a mortgage broker is there to support you through one of the biggest financial undertakings of your life. Your success is their success, so they will do everything they can to make your home loan experience a fulfilling one.
Should you use a mortgage broker instead of going directly to a bank?
Perhaps the best way to answer this is to point out that by law, mortgage brokers are bound by regulation called ‘Best Interests Duty’ which is designed to ensure that retail clients receive advice that meets their objectives, financial situation and needs, and that brokers act in the best interests of their clients when providing advice. Banks and are not bound by this duty and given they will only ever recommend their own products; you may not end up with the product that best suits your needs.
When you’re in the market to buy property, it could be useful to understand how much you can borrow from a lender. Conditional pre-approval for a home loan is not essential, but it is wise to organise one through your broker.
What is a home loan pre-approval?
A home loan pre-approval, also known as conditional approval or approval in principle, is when a lender gives you an estimate of how much they are prepared to lend you. This is generally confirmed in writing with any associated conditions listed.
Conditions could include things such as a professional valuation of a property you would like to purchase.
The process of getting a pre-approval typically involves your broker applying to selected lender, who will check your finances (such as checking your credit score) and assess whether you’ll be able to repay a loan.
If the lender offers conditional approval, they’ll a grant conditional pre-approval to borrow up to a certain amount, which in the current marketplace will be valid for 3 months.
It is important to note that conditional approval is not a guarantee that you will be approved when you find a property to buy and proceed to formal approval for a loan.
For example, your eligibility may change if:
- Your income reduced for any reason.
- The lender alters its loan policies and procedures, such as changing approval conditions.
- There are major movements in interest rates which may reduce your borrowing capacity.
If you do not currently have a mortgage broker or would like to try someone new, we highly recommend the services of Mortgage Domayne who have a five-star rating from 493 reviews. You can find out more about them here.