What comes first: the property or the loan?

It’s easy to get carried away with the fun part of buying a property – looking at houses – but delaying the less compelling task of arranging finance will weaken your negotiating position on both the property and the home loan.

Looking for a property to purchase is an exciting time. Choices regarding location, size, number of rooms and local amenities often see house hunters carried away in a deluge of daydreams and anticipation.

Before you get carried away, it’s important to check off the essentials first. Although organising your finances may seem drab in comparison to looking at sales listings, gaining pre-approval with a lender will give you confidence about how much you can afford to borrow.

First and foremost you need to determine if you’re eligible to borrow money from a home lender. Your ability to repay the home loan will need to be assessed. You don’t want to find out after you’ve made an offer that your credit history or deposit is not up to scratch.

Arranging finance before finding the perfect property will put you in a good negotiating position when it comes time to make an offer. When you do find the house you have always wanted, you can present to the seller and their real estate agent as a prepared applicant who is serious and reliable.

It shows you mean business, and gives them peace of mind that your financing will not fall through. Don’t be afraid to let the selling agent know you have a conditional home loan approval in place. Sellers are most interested in completing their sale fuss-free and with reliable funding, and showing that you are capable of both will help put you at the top of a potentially competitive list of prospective purchasers.

In the instance that you find and secure purchase of a home without having your loan pre-approved by a lender, there are a few pitfalls that you risk running into. If you don’t have financing to pay for your property, you run the risk of forfeiting your initial 10 per cent non-refundable deposit you need to put down to secure the property. This may differ depending on what state you live in, but the point is it always pays to be organised and have a home loan pre-approval in place.

Saving home loan applications to the last minute also leaves less time to find the most suitable loan and have it approved ahead of settlement.

Arranging financing as an afterthought also adds immense pressure to the process of shopping around for the right loan and gathering the paperwork to prove you can service the home loan. To avoid rushing this process, contact a qualified and trusted Mortgage Broker today.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.