What does pre-approved mean? Here’s what you need to know

Article summary

• The pre-approval process provides you with an idea of what you can afford on your home loan.
• It also provides you with your credit record which is important information to have before applying for a home loan.
• 90% of home loan applications that have been prequalified by ooba Home Loans are approved by the bank.

Buying a home is an exciting process, but you first need to know what you can afford. This is where pre-approval comes in.

What does pre-approval mean?

It’s a process by which you qualify for a home loan without actually applying for a home loan. It evaluates your financial situation and determines whether the bank is likely to grant your home loan application based on that.

What are the benefits of pre-approval?

• You find out your credit record, which is the single most important factor banks will take into account when assessing your home loan application. Knowing your credit record beforehand is useful as you know whether you need to improve it before applying. Your credit score should be at least higher than 610.
• You will receive a prequalification certificate which you can show to your estate agent to let them know you’ve done your homework.
• You’ll have an idea of what you can afford before you commence your house hunt, so you won’t expend time and resources on applying for a home loan on a property that’s outside your price range.
• Over 90% of home loan applications with an ooba Home Loans prequalification certificate are approved.

How do you get prequalified?

You have two methods available to you:

• Use our free, online tool, the Bond Indicator. All you have to do is register online, enter your income and expenses, and within a few minutes you will be given an estimation of what you can afford.
• Contact one of our home loan experts. They’ll assess your financial situation, as a bank would. You’ll have to submit a signed prequalification form, your ID, your latest payslip, and your latest bank statement.

Above all, getting pre-approved will provide peace of mind that can be invaluable in a process as important and financially significant as the acquisition of a new home.