Thinking about buying your first home? One of the biggest mistakes first home buyers make is waiting too long to get a home loan pre-approval.

In this guide, we’ll explain what a pre-approval is, the benefits of getting pre-approved early, and why you may be able to buy sooner than you think.

Quick answer

Getting first home loan pre-approval early can help you understand your borrowing capacity, identify potential problems before they become deal breakers and be ready to act when the right property comes along.

What is a home loan pre-approval?

A home loan pre-approval is an assessment by a lender that indicates how much you may be able to borrow based on your income, expenses, savings and financial position.

It gives you confidence when searching for a property because you’ll know your budget before you start attending inspections or making offers.

Benefits of getting pre-approved early

1. Know your borrowing capacity

Instead of guessing what you can afford, you’ll know your approximate borrowing limit and estimated repayments.

2. Find problems before they become deal breakers

A mortgage broker can identify potential issues with your credit file, deposit, existing debts or documents before you find your dream home.

3. Be ready when the right property comes along

If you’ve already been pre-approved, you’re in a much stronger position to make an offer quickly.

Don’t assume you have to wait

Many first home buyers delay speaking to a mortgage broker because they think they don’t qualify yet. In many cases, that’s simply not true.

“My parents are gifting me my deposit”

Many buyers believe they must hold gifted money in their account for several months before applying. However, some lenders will accept a gifted deposit supported by a signed gift letter.

Depending on the lender’s policy, this may satisfy their genuine savings requirements. Every lender has different lending policies, so it’s worth checking before assuming you need to wait.

“I’ve only saved a 2% deposit”

A small deposit doesn’t always mean you need to delay buying. Depending on your circumstances and eligibility, some lenders and government support programs may allow eligible buyers to purchase with a much smaller deposit than they expected.

The key is speaking to a broker who understands which lenders may suit your situation.

What happens if my pre-approval expires?

This is one of the most common questions I receive. The good news is that if you haven’t found a property before your pre-approval expires, extending it is often straightforward.

In many cases, the lender simply requires updated documents and confirmation that your financial position hasn’t materially changed.

• Payslips

• Bank statements

• Confirmation that your financial position hasn’t materially changed

Your broker will manage the extension process and keep your application up to date.

Speak to a mortgage broker before you wait

Every lender has different lending policies. One lender may require genuine savings, while another may accept a gifted deposit. One lender may decline a loan application, while another may have a policy that better suits your circumstances.

That’s why speaking with an experienced mortgage broker early can save you time, stress and unnecessary delays.

If you’re thinking about buying your first home, let’s have a chat. You may be closer to home ownership than you think.

Contact Matthew Stack

Matthew Stack, Senior Mortgage Broker at Fetch My Home Loan. Phone: 0423 237 242. Website: fetchmyhomeloan.com.au. Book a free, no-obligation chat to discuss your first home loan, borrowing capacity and pre-approval options.

Useful next steps

• Read more first home buyer guidance on the Fetch My Home Loan website.

• Book a free chat with Matthew to discuss your borrowing capacity and pre-approval options.