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What is a pre-approval and how do I get one?

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A pre-approval is available from the majority of lenders and it involves placing an application with the lender prior to finding a property. It is very helpful in a number of instances such as attending an auction were you are required to pay the 10% deposit up front then sign an unconditional contract or ensuring you know how much you are able to spend on a house prior to talking to a real estate agent.

I spoke with Mark Ashley from Elders Real Estate and he agrees that if he is able to know how much a client is can spend on a property he can ensure the houses are within that price range to show a client and save everybody time and heartache. “There is nothing worse than having a young couple get their heart set on a property worth $220,000 and having them then find out that the most a bank will lend them is $200,000. It is disappointing for everybody Vendor included”.

Pre approvals though do not come with some risk as the lenders have many disclaimers that ensure they need to be happy with the property, the final checking of your employment details and sometimes even your credit history. I will always explain fully what those risks are to my clients and ensure we manage these effectively and that a pre approval is necessary instead of a finance clause.

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