In this week’s episode #63 of the Property Planner, Buyer and Professor Podcast, the team discuss “Setting yourself up to purchase with confidence and why getting your pre-approval in place is more critical than ever”, as Dave, Cate and Pete discuss:
- The current state of the market. The Property Planner and Buyer shed light on the flood of enquiries and high levels of interest from prospective purchasers looking to get their ducks in a row to make their next property decision.
- What’s driving the flurry of activity?Affordability is the best it’s ever been, interest rates are at an all-time low (and will stay that way for a few years according to RBA Governor Philip Lowe), existing properties have held their value and started to increase, which gives people the confidence to take that next step.
- How long will it take to get a pre-approval?Trying to get a pre-approval has been difficult since Covid started, banks have had their challenges with an influx of queries from customers looking for repayment pauses, assessment criteria has been stricter than ever before, with new rules implemented for checking (and re-checking) income. The time to have a pre-approval assessed has blown out to 20-30 days with some of the major banks, plus it’s worth noting that pre-approvals are the second-class citizen of the finance world. The upshot – it’s critical to act now and act fast!
- Should you get multiple pre-approvals?With the long turn-around times and queues to get an approval, you may be tempted to apply a scattergun approach to lenders. But this is not necessarily helpful and could also harm your credit score. The trio share strategies you can use to get your pre-approval up and running quickly.
- What should you be doing right now if you are interested in purchasing?Contact your strategic mortgage broker and buyer’s agent right now! Knowing a ball park range of your borrowing capacity and determining your strategy are the first ducks that need to be herded in line. Getting caught up on the lender can waste precious time!
- When is the right time to purchase?It’s easy to get swept up in the FOMO (fear of missing out), but you also need to consider what is the right decision for you and when is the best time to make it. If you can purchase a superior asset if you wait, you could set yourself up for better financial success than if you purchase a poorer quality asset now. Getting quality and independent advice is the key.
- What pre-approval should you get? The Property Planner, Buyer and Professor discuss the different types of pre-approvals available and which you can rely on (and which you shouldn’t) to purchase with confidence.
- Selecting acceptable security. A pre-approval is never a guarantee for lending and will always be subject to the property being acceptable security for the bank.
- And of course, our ‘gold nuggets’!
David Johnston- The Property Planner’s Golden nugget: whether next decision should be investment or home. If you’re still working through what is the right next property decision in the context of your long-term plan, lifestyle goals, portfolio planning, then you probably shouldn’t organise a pre-approval until you are clear on whether the next decision is a home or investment. That’s often the case for first time buyers too, you do want and need to be clear on this. This is another way that things can be delayed for people getting a pre-approval.
Cate Bakos – The Property Buyer’s Golden nugget: when it’s safe to go remaining concern is that you’re not paying too much for it, knowing if you do want to adopt a competitive stretch, you need a plan B. Buffer funds you could tip in yourself, or family member who could step in and help you out, higher percentage LVR on your loan. You should be stepping in with confidence instead of subject to finance clause.