I get asked a lot of questions as a buyer’s agent, but the one above is probably the most frequent. I always counter that with my own question…
Would you consider going shopping without your wallet? This is mostly met with confused and bemused faces.
You see, it is really quite simple. When you do your weekly shop at one of the major supermarkets; list in hand, meals you want to cook in the back of your mind, it takes time to navigate the many other people trying to do the same… especially on weekends. How frustrating would it be to finally cross everything off that list, wait in line, put everything on the belt for the cashier to scan and pack it… only to find you have left your wallet at home so you leave for home empty handed…
Well, this is exactly the same when you go inspecting property without actually knowing how much you can spend on a property or without having a written agreement from your preferred lender in writing.
It would all be a complete waste of time — and who needs that in this time-pressed world we all live in?
So, before you start looking at any properties, in person or online (I know it’s very tempting!) I would strongly urge to go and see a mortgage broker first.
Talk to them about your situation, what you are hoping to buy and how much of a deposit you have. A good chat with them will give you a much clearer picture of the achievability of your property-owning dreams.
A good broker will have access to about 30 institutions or so, who will all look at your individual circumstance slightly differently, so he or she can make sure they find the best mortgage for you.
In some instances a lender will pre-approve you on the basis of you matching certain criteria. An example of this could be you paying off your credit card first before they will lend you the money, so be sure to satisfy those requirements before going out there in the market and signing on the dotted line.
Another thing to keep in mind is that when you are out inspecting properties without a pre-approval organised (the agents will ask you!), the likelihood of being taken seriously by agents is very small. You can’t really blame them because getting a pre-approval organised does take some time. By the time you have decided to go for a property, see a broker, get a pre-approval, and than do all your due diligence such as getting the contract reviewed, do a building and pest etc. etc., they may have sold the property to someone else!
My final tip would be to make sure you keep current on the pre-approval once you have received it. The banks will generally give out an agreement in principle for 90 or 180 days, so it does lapse after this time and you will need to re-new it. Unless your circumstances have changed, this is normally only a formality, but an important one nevertheless.
I look forward to seeing you out there at opens, with that pre-approval in your back pocket!