For a new build home & land package in Australia pre-approval is a crucial step in the process. It’s the financial green light that determines how much you can borrow to start the planning process, whilst demonstrating to builders and brokers that you are a serious buyer.

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You may be surprised by some of the factors affecting pre-approval. To make life easier we’ve put together a few points you can consider to make pre-approval a breeze. 

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No New Loans - including Afterpay! 

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It sounds obvious right? But even using payment apps like afterpay can increase your debt-to-income ratio, which affects your borrowing capacity.

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And whilst it may be tempting to get a brand spanking new car to match your beautiful new home, hold your horses. Securing your home loan is much harder if you introduce new debt, so be patient and make life easier. 

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Gamblers Beware

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We all love a turn on the pokies but gambling through betting companies can be a major red flag by lenders as it indicates poor financial management. Take a break from Sports Bet and save your loose change for the machines down the pub if you can’t completely quit the game!

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Keep Finances Consistent 

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Times are always changing but right now your job shouldn’t be. Switching employment upsets your income history and consistency, making lenders wary of your ability to repay the loan. 

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No Late Payments

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Late payments affect your credit score and look bad on your bank statement. If you have money set to come out of your account for existing debits, make sure there is money in your bank account. A clean statement will show the banks you are responsible with your cash. 

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Gather Financial Documents

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To apply for pre-approval, you will need to provide your lender with a range of financial documents, including payslips, tax returns, bank statements, and other proof of income and assets. Ensure that you have these documents ready to upload to the Balfour App so that your digital broker can work their magic!  

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Don’t worry after this, your Balfour specialist will do all the hard work finding a lender, builder, and home & land package for you! 

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Be Honest About Your Financial Situation

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Honesty is the best policy when it comes to applying for a home loan. Be upfront with your broker or lender about your financial situation, including any debts or financial obligations you may have. It’s no drama, but if your financial circumstances change, your pre-approval may need to be updated which will delay the process.

Save for a Deposit

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Pre-approval aside, most lenders require a deposit of at least 5% of the purchase price when buying a house. 

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And there's no time like the present to start building that lump sum. The larger your deposit, the better your chances of getting pre-approved. 

Don’t clear all of your debts

Avoid paying off all of your loans. Sometimes it’s better to put your savings into your deposit rather than paying off existing debts as you can still service a loan with debts. Loans are determined on the size of the deposit as well as your ability to pay back the loan. Unsure? … Speaking to our Balfour team will help you determine a plan in this situation.  

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Ask the Experts

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Speaking of the Balfour team, if you are not familiar with the home loan process it can be helpful to seek professional advice. We can help you navigate the steps and help tailor the advice to suit your financial situation and home-buying needs. 

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Conclusion 

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Getting pre-approved can be as simple as making good financial decisions and keeping some financial consistency. It’s all about showing lenders that you are financially responsible enough to service a loan.

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Pre-approval is a vital step to finding your dream home and though there may be some loops to jump through, following these tips and being prepared will ease the process. 

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Furthermore, you can make the process even more streamline by utilising the specialists at Balfour Homes!