You wouldn't leave home on a cloudy day without checking the weather forecast. After all, a sudden rain can leave you soaked! In the same way, getting on the property hunt without knowing what you can afford is unthinkable. Being prepared is the first step toward success, and that's where bond pre-approval comes in handy. With a solid idea of properties in your range, you can make your dreams of homeownership a reality.
What does a bond pre-approval mean?
Before you start drooling over property listings, getting bond pre-approval should be on your checklist. When you apply for a bond pre-approval, you supply your financial details to a home loan provider. They evaluate your eligibility, providing you with your likely interest rate and the amount you can borrow.
While a bond pre-approval isn't a guarantee of a loan, it provides an indication of how much you could qualify for if you applied for a loan. This is more likely if your financial situation doesn't change and the home you buy is worth enough to serve as collateral.
5 advantages of being a pre-approved buyer
It may seem like a hassle taking the time to apply for pre-approval. However, going through the process is definitely worth it for savvy buyers.
1. Know what you can afford: With an accurate measure of your purchasing power, you can narrow down properties with the right price bracket in mind. It can be heartbreaking, a waste of time, and even problematic if you shop beyond your budget and, potentially, create debts. Instead, you can get your heart set on a house in the right area and with all the features you can afford.
2. Act fast on the market: Timing is everything with a sale. If you find the right property, you don't want to lose out because your finances took too long to clear. Pre-approval can speed up the process by showing buyers you have what it takes to afford their property. It also makes securing your home loan easier.
3. Get your offer approved: A pre‑approval certificate lets you approach sellers with confidence and negotiate with more favourable outcomes. This certificate adds clout to your offer to purchase as it shows you're serious about buying and have a greater chance to get your home loan approved. Sellers will appreciate the quicker timelines you offer in what is often a lengthy and challenging process. It will also encourage them to be more willing to work around your schedule for viewings.
4. Have peace of mind: If left until the last minute, buyers can often be unpleasantly surprised by how much home loan providers are prepared to lend them. While affordability calculators can give you a rough idea, it isn't equivalent to an assessment by a financial institution. By getting pre-approval, you can remove any potential disappointment from the process and, instead, search for properties within your means.
5. Get your home loan approved: Pre-approval makes securing a loan easier and faster. Because you've provided the required documents and been verified by your lender, it helps you skip some steps. In fact, over 90% of home loan applications with an ooba Home Loans' pre-qualification certificate are approved.
When should you apply for a bond pre-approval?
Figuring out at which point to get a bond pre-approval can be tricky for buyers. However, it should always be done before you start visiting properties so you have a clear idea of what you can realistically afford. Also, most certificates are only valid for 90 days since the financial positions of buyers can change over time. After this lapses, you'll have to apply again.
How do you get a bond pre-approval?
Depending on the home loan provider, you can either apply on an online system or speak to a human assessor. ooba, for example, provides both options for potential homeowners.
- ooba Bond Indicator: This is a free online affordability tool that allows you to check your credit score and establish what you can realistically afford in a matter of minutes. You register online, provide information on your income and expenses, and have your credit score checked. You're then issued with a pre-qualification certificate.
- Speak to an expert: An expert will examine your credit record and your income and expenses in the same way a bank would to give you an accurate assessment of what you can afford and how likely you are to qualify for a bond. In this option, you'll provide a signed pre-qualification form, a copy of your ID, your latest payslip, and a bank statement.
Never fear this will impact your credit score. The credit check done during the pre-approval process is a soft enquiry. This is in comparison to multiple enquiries for personal loans which have a more significant impact.
Put your pre-approval to good use
Once you've received your bond pre-approval certificate, it's time to get your property search going. Century 21 Bronkhorstpruit is here to help with incredible properties for sale. Get in touch with our expert team today.