Before looking for a house, many borrowers look at getting a pre-approval in place so they can enter a contract with a bit more confidence. A pre-approval is actually a full loan application with the lender of choice, but without an actual purchase property; thus giving the lender a full overview of the customers background and profile.
Is a Pre-Approval Guaranteed?
Unfortunately not. As long as your personal circumstances don’t change, you will very rarely run into issues as the borrower; however, the property you’re purchasing can often be the problem. Once you have found a property and requested your pre-approval be turned into a formal approval, the bank will order a valuation on the property to check it is satisfactory. If the property doesn’t value up, or is an unsatisfactory security, the bank will not proceed with the loan.
How long does a Pre-Approval last?
This varies from lender-to-lender, but generally a pre-approval will last 3 months. Many lenders will also be happy extend this time period on request.
Will I need to provide payslips etc.?
In order to get a pre-approval, you will have to give the lender all the required documents: Driver Licences, payslips, bank statements etc. Once you have entered a contract, you may need to provide everything again if the payslips and bank statements are out dated (more than 30 days old), just to prove your situation has not changed.
Does a Pre-Approval cost anything?
No. A pre-approval is a free service provided by many lenders in order to help them secure your business.
How long does it take?
Depending on the time of year, and the lender of choice, it can be anywhere between 1 and 8 business days generally.