Buying a property without pre-approval is possible; however, there are some factors, conditions or limitations that one needs to be aware of in order to continue the process. Read on to understand the factors you need to consider in relation to home loans in Sydney.
Factors You Need To Consider To Buy A Property without Pre-Approval.
Generally, if you are looking to invest in a home, it would be recommended that you get a pre-approval before hunting the properties. However, there are some situations where buying a property without pre-approval is not a big problem, such as:
If You Have Been Pre-Approved Recently.
If you have had a recent pre-approval that expired in the last six months, then you can continue with the process of buying a property without having to reassess, but it is only possible if your financial situation has not changed at all. The only essential factor you need to consider in this case is the elevation in the interest rate, as it can affect your borrowing power.
If You Have A Strong Financial Position.
If you have sufficient deposits, reserved cash, and a good credit history and don’t tend to borrow at the highest capacity, you can confidently look for investing in a property with pre-approved.
If You Can Put A Finance Clause In The Offer.
You can include a finance clause in your offer if you submit a bid through a private treaty. A finance clause allows you a certain amount of time to settle your loan. If you are not able to get your loan in place within the specified period, then you are allowed to walk out from the sale with a full deposit. Note that this process is not similar to an auction; the conditions do not apply.
If You Have Less Deposit And No Reserved Cash.
Getting a pre-approval with the help of a finance broker in Sydney is an ideal option if you have less deposit and no reserved amount. The lenders are at a significant risk when you apply for a high LVR; therefore, assess your overall credit score very carefully.
This means that if you don’t get the approval and the value of the property is higher than what you are capable of borrowing, you might put yourself in an imbalanced financial situation. Therefore, getting pre-approval for home loans in Sydney is essential if you have fewer deposits and no cash reserves.
If you are considering borrowing at your highest capacity,
It is an ideal option to get a pre-approval if you have a deposit of about 20%, but you are still looking to borrow at your highest capacity as high-value loans mean high repayments, which can affect your budget. This would help you understand whether you can afford the repayments based on your financial situation and help you plan your budget.
Even if you are able to buy a property without pre-approval, the market conditions and bank timelines highly affect the process. Getting pre-approval elevates your chances of purchasing the property as it ensures the sellers are not wasting their time and dealing with serious buyers. Pre-approvals of home loans in Sydney through a finance broker in Sydney also give rise to your confidence while negotiating. Therefore, buying a property with a pre-approval is preferred to play safe. However, you can always do it without a pre-approval if you have favourable conditions.
