These days, finding a home in Auckland can be difficult. Prices are continuing to increase and availability is scarce. You need to be as prepared as possible to be in position to make an offer and quickly to secure your dream home.
To be in that position you need to make sure you have an approval from the Bank for your finance. I have asked Glen McLeod and Jon Purdey of Edge Mortgages to write up a guest post to explain the important things to know regarding obtaining finances.
[box]From Glen and Jon
When obtaining finance there are two types of mortgage approval:
- A full Approval – this is where you know the address of the property and you can provide this, along with supporting documentation, to allow the Bank to give you the approval for a specific property
- A PRE-Approval – this is where the Bank are happy with you as Borrowers, including income and deposit, but you have yet to find a property
A Pre-Approval is valuable to have when you are looking for a property for two main reasons. Firstly, it means the Bank is happy with every other aspect of your ability to borrow apart from the home you are looking for. Secondly, you have a piece of paper which tells you how much the Bank is prepared to lend you to buy the home. This helps focus your efforts with your search for a property – and your Real Estate Agent can then show you a range of properties that you know fit your budget.
To get that Pre-approval it makes sense to go through a good Mortgage Broker. The fact is that one Bank may lend you tens or even hundreds of thousands of dollars more, on the same day given the exact same circumstances, than another Bank. A good Broker will make sure that they have an overview of which Bank will give you the most on any given day.
A good Broker also knows how to present the deal to ensure it has the best chance of getting approved. As well as judging the best Bank to go to we know where it should best go within the Bank – for example, it may be that a residential deal best goes to a commercial contact based on an aspect of the information provided. It’s our job to do everything to make sure it gets approved.
For a lot of people, the first time they find out they have an issue on their Credit Report is when they go to apply for a mortgage and generally the Banks struggle to lend once this is discovered. The good news is that there are Lenders who will potentially allow you to borrow even if you have multiple Credit issues.
Also, providing a standard Bank a reasonable explanation about the reason for the Credit issue may mean we can get a mortgage through traditional channels straight away. This means that you can possibly get back into the property market now instead of waiting for up to 5 years, or you can save that property you own and would love to hang on to.
A Mortgage Broker knows the best way of getting you a mortgage when you’ve discovered you have credit items on your report.
Currently, for a standard Residential deal through a Trading Bank, the lender pays the Broker’s fee, meaning that you get all this skill and professional knowledge at no cost to you! Which other profession provides that?
The question is not why should you use a good Broker – the question is why wouldn’t you?![/box]
So the first step that you should be doing in your home hunting journey is to obtain finance pre-approval, this will give you clarity on the level of property that you can buy and afford. I too can say that it is best to go to a mortgage broker as opposed to directly to a bank. If you have any question regarding this that I can help with, please feel free to give me a call on 09 481 0648.