There are a number of crucial steps to take when borrowing money from the bank.
It can be a confusing, and lengthy process, so always allow yourself plenty of time, and be prepared to ask questions; leave no stone unturned.
Seeking Pre-Approval
Before you make the decision to buy an apartment, you’ll need to seek pre-approval from the bank as to how much you can borrow, and whether you can afford the repayments.
A pre-approval is a preliminary assessment of your finances.
It’s important because it will give you the confidence to go to the bank for a loan application, and will eliminate any surprises.
The assessment with outline your borrowing capacity – that is, how much you can borrow – the costs associated with the loan, and how much you will need to fork out in order to secure a loan.
Once you’ve been pre-approved, it’s time to start looking for the property of your dreams!
Size does matter
Size can affect the finance process when it comes to off-the-plan apartments.
Some banks, in order for the loan to qualify as a home-loan, ask the apartment meets certain sizing standards.
You could run into some trouble securing the loan if the size of the apartment doesn’t fit into the guidelines, or you could be forced to fork out a higher deposit.
As a rule of thumb, the apartment should be at least 40 square metres to pass the lender guidelines, that includes both indoor and outdoor areas.
When should I start applying for the formal loan?
You’ve found your place, paid your deposit, and the settlement date is 12 months away.
It can feel like all the time in the world until you have to secure your formal loan.
However, don’t put it on the back burner!
We suggest you apply for your formal loan around 3 months before the settlement date.
This gives you plenty of time to allow for hiccups changes along the way.
It also allows you more time to browse the lender market, and make an active and informed decision.
Should I enlist the help of a mortgage broker?
If you’re a little nervous about choosing a loan, and leaving it all up to the banks to decide which loan you are getting, then why not get in touch with a mortgage broker.
They’ll help you discuss your financial requirements, break down the nitty gritty on each loan, give you all of the fees and costs you’ll have to pay, and help you submit the loan application to the lender of your choosing.
Happy loan hunting!
(Please note: the information supplied is based on advice and suggestions, and is by no means a legal guideline.
For more information, contact a professional)
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