Ok, getting a pre-approval from the bank involves a bit of paperwork and they never actually give you the cash to make a spanish fan out of a la Beyonce. However, if you get this done, you will be well on the way to being a Diva.
When I first meet with most of my clients in our initial chat, most of them tell me a bit about what they’ve been doing up to this time in their lives, and where they want to be in the next year or so. I am not talking about five year plans here – most people (me included!) can usually only plan well for another year in advance. We then chat about where they would like to buy – what they have seen that they love, what they saw that really sucked and what kind of deposit (if any) they have towards their new property.
The most important first step in being able to work out what you really can afford is going to a broker. Some of my clients have been really skeptical initially of a broker, as they have a good relationship with their bank. And mind you, banks get in early. I remember my first yellow plastic Dollarmite account. And by golly, they got me good with all my accounts remaining at Commbank – for better or worse. But I know that if I had only gone to Commbank for my homeloan, and I went alone without professional advice – I could have been sold any product that may not have suited me financially (or ethically).
Banks sell products. A loan is a product, a transaction that the bank makes startup fees on and that you continue to pay interest on for the duration of the loan. Depending on whether they are fixed or interest free, bank loans can have really heft exit fees if you decide to end that loan or re-finance and consolidate your debt. Don’t be worried about all the finance psychobabble – what I am really trying to impress upon you is that a Bank is like Sportsgirl and a Loan is like the newest maxidress. Just remember – Sportsgirl will want to sell you any darn dress REGARDLESS AS TO WHETHER YOU LOOK HOT IN IT OR NOT. Similarly, a bank will offer you the best product they produce for you – BUT NOT NECESSARILY THE BEST PRODUCT AVAILABLE OUT THERE FOR YOU.
This is really important to understand, as our relationship with banks are often fostered from a really young age. We feel we can trust them, and that by using a broker we may be ‘shopping around’ on our trusted friend. Remember: WE PAY THEM!
A reputable and intelligent broker is the first place you must go to work out what you can comfortably spend, and what will work for you. You do not pay a broker – the banks do. The broker works for you, and will offer you a range of loans from different lenders (ie a personal shopper at Chaddy showing you a range or killer heels from different shops) that will suit your needs best. Don’t wait until you start looking for a house to organise this stuff. I have seen time and again that once you start hunting, the perfect home will pop up. If you don’t have finance in place, your inability to buy that dreamhome is nothing more than timing. It’s not that you couldn’t get the money – it’s just that you didn’t get off the couch and do something about organising yourself!
Moreover, having a pre-approval before shopping can often allow you to purchase a home paying a little less. To a vendor (seller of a property), an UNCONDITIONAL CONTRACT that is a few grand short of their goal is worth far more than a contract riddled with conditions (finance approval, Archicentre approvals etc) but paying a bit more. This is because a purchaser with a pre-approval is considered a serious and knowledgeable buyer. They have done their research, they are confident, and the banks have made them good for the money. This is very appealing to a vendor, and really gets them in your court.
For a range of quality brokers, make sure to get in touch with me and I will be able to get you on the right track to being a knowledgeable and in-control home owner.
I think that ACDC really says it best!
m) 0403 475 919