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Borrowing to Build

by nat stevens

How and when do I get pre-approval when building?

GETTING PRE-APPROVAL FOR YOUR LOAN

Before you do anything else, you need to find out how much you can borrow and to know how much you can borrow, you'll need to apply for pre-approval.

Your pre-approval amount becomes your budget

The amount you’ll be able to borrow is calculated on your personal financial position across the board. Applying to borrow money is an information-gathering exercise.  It can also be a time-consuming exercise, and you can waste time if you have to have numerous meetings with your broker because you don’t have everything they need to assess your situation. This time wasting only contributes to the ‘hassle’ of building and we want to help you to avoid that. Having all the right information on hand from the start saves you loads of time.

Based on the information you give them, your broker will assess the information and conduct research with their network of lenders.  Based on their fundings they will advise you what lenders can offer you in pre-approved funds. You choose the option that best suits your circumstances. Not only should you be interested in the best rates and the best service, but your loan must have the level of flexibility that you desire, such as the ability to redraw on the loan if you wish or to make bulk repayments. Are they offering you the option to borrow with a construction loan (covered in the next topic)? If so, how will that be structured? Be sure you know what position you’d be in if you had a sudden change of events that affected how you serviced the loan.

A personal mortgage broker is the best person to help you work out which home loan solution is best to help you achieve your personal and financial goals sooner.

What you'll need to apply for pre-approval

Here is a basic list of things you'll need to supply when applying for pre-approval.  The lender you're applying with will have a more detailed list of what they require to assess your pre-approval application.

For employees:

  • Three-month statement showing salary
  • Last three payslips and employer letter detailing payment summary

If you’re self-employed:

  • Personal and business tax returns for the last two years

If you have rental income:

  • Current lease agreement
  • Tax returns showing ownership
  • Three-month statement showing rent

If you have government income:

  • Letter from Centrelink showing benefits
  • Account statements showing payments

Identification:

  • Passport, licence or birth certificate

What else should I bring?

  • Details of all other loans, savings and investments
  • Details of monthly living expenses

in summary

nothing10b

Your pre-approval amount becomes your budget.  That's the figure you use to calculate what you can spend on your new home.

 

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quote

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By failing to prepare, you are preparing to fail

- Benjamin Franklin

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Disclaimer

This information is of the nature of general comment only, and does not represent professional advice nor should it be substituted for professional advice. Whilst attempts have been made to ensure the accuracy of the information, we don't guarantee it's accuracy.  Any information we provide is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. You should always obtain professional advice before making any decision to purchase property of any kind.  We recommend you seek professional financial advice prior to entering into a contract of any kind.   Build In Oz disclaims all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this course.  Please refer to our privacy and disclosure statement for further information.