What First The Home Or The Home Loan

What First: Home or 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 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.

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

Finance Preparation Tip
First and fore most you need to determine if you’re eligible to borrow money from a lender and if so, how much you can borrow.

Your ability to repay the loan will need to be assessed – you don’t what to find out after you’ve made an offer that your credit history, deposit or borrowing capacity is not up to scratch.

Arranging Finance Increases your Negotiating Power
Arranging finance before finding the perfect property will put you in a great 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 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. In a competitive market, letting the selling agent know you have conditional loan approval in place could put you a step ahead in the negotiating process and help you buy the home you have always wanted.

Sellers are most interested in completing their sale fuss-free and with steadfast funding, and showing that you are capable of both will help put you at the top of a potentially competitive list of applicants.

What Could Go Wrong Without a Pre-Approval
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 pre-approval in place.

Extra Stress
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 loan. You don’t want to rush this process.

Get Sorted
It is far more fun to have the right loan sorted so you can go shopping to furnish your new home instead.

In Summary
Being prepared will increase your bargaining power with the seller, be less stressful and save you time when you do find the perfect house.

To take the first step towards finding your new home and being in position to negotiate hard, contact us on 1300 873 455 today.

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