Do I need pre-approval and how do I get it?

You can get a leg-up on other buyers and shop for your new home with confidence if you've been pre-approved for a home loan.

A formal pre-approval is a critical step in purchasing property - it's when a lender gives you an approved amount to borrow based on a full assessment of your financial situation.

What this means is that you can attend auctions and know what your price limit is and how much your repayments would be at a certain price range. Even if you're borrowing a small amount, a formal pre-approval is a good idea. You'll know exactly how much you have to play with, putting you in a stronger position to negotiate with a vendor or bid at auction.

Advantages of home loan pre-approval:

• You'll know exactly how much you can spend
• You know what your repayments will be
• Your final loan will be organised faster
• There's no cost to you

A formal pre-approval is important

There are different kinds of pre-approval - it's important you get a formal, written pre-approval. Once you have it, you can negotiate or bid under almost the same conditions as a cash contract.

Be wary of any website that offers you a pre-approved home loan without taking the time to assess your financial situation. A Loan Market mortgage broker will organise your home loan pre-approval for a loan that matches your personal situation and financial goals.