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Pre-approval – power to the buyer

- Monday, August 03, 2009

Whether you’re on the Saturday morning auctions circuit or negotiating with real estate agents, securing a loan pre-approved could make the difference between finding your dream home and actually buying it!

A pre-approval is essentially a guarantee from a lender that they will loan you an agreed sum before you have made a commitment to buying a property.

Knowing your borrowing capabilities before you set foot in the property market is a big advantage as you’re able to hone your search to the properties that are within your budget. But a pre-approved loan is also a powerful negotiation tool in both a buyers and sellers market.

With cash at the ready you’ll have the edge over prospective buyers that have a question mark over their finances – and this can give you a distinct advantage.

Bidding at actions is considerably safer with your finances already intact. Not only do you have a clear idea of your maximum threshold, you know you can move quickly to settle.

But a pre-approval will also strengthen your hand when dealing with a real estate agent or vendor for a property that’s for sale by negotiation. With your finances in order, you’ll have the edge when it comes to haggling on price as you have the bargaining power to offer a faster settlement.

So what’s involved in the pre-approval process, and more importantly how can you secure one?

You may be surprised to hear that the pre-approval process is fast and simple. After an assessment of your financial situation the lender will calculate your borrowing capacity and can sometimes issue a pre-approval in a matter of minutes. Once confirmed, your pre-approval usually has a life of three months.

If you’re thinking about buying a property or are interested in finding out about your borrowing capabilities give your broker a call.


This article does not necessarily reflect the opinion of the author/s,  Carruthers Financial Services Pty Ltd or any of its employees or subsidiaries. It is intended to provide general news cand information only. While every care has been taken to ensure the accuracy of the information it contains, neither the author/s, Carruthers Financial Services Pty Ltd,'Carruthers Financial Services Pty Ltd's employees, or its subsidiaries, can be held liable for any inaccuracies, errors or omission. Copyright is reserved throughout. No part of this article can be reproduced or reprinted without the express permission of Carruthers Financial Services Pty Ltd expect for the use for which it was purchased for. All information is current as per the date of delivery and Carruthers Financial Services Pty Ltd will take no responsibility for any factors that may change thereafter. The purchaser of this article and all readers thereafter are advised to contact their financial adviser, broker or accountant before making any investment decisions and should not rely on this article as a substitute for professional advice.

David Carruthers is a credit representative (Credit Representative Number [400226]) of BLSSA Pty Ltd (Australian Credit Licence No. 391237).