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Is it Worth Getting a Finance Pre-Approval in this Hot Property Market? - April 2021

By Guest Blogger, Louisa Sanghera, Principal Broker,

Zippy Financial

It’s no secret that property prices are booming in many markets right now, with Sydney prices in the news every week. 

With so much competition, does it mean you need to do everything you can to act fast and jump into the market right away – or should you take the time to get a pre-approval before you start shopping for property?


Get the competitive advantage

If you’re wondering whether you should consider getting a pre-approval despite how strong the market is, my advice is that it gives you a distinct competitive advantage. 

A pre-approval shows the buyer that you're very serious about buying the property. Furthermore, they have the confidence that if they accept your offer, they won’t have to wait for weeks (or even months) for your finance approval to come through. 

The tricky thing here is that every single bank and lender will assess your loan differently, as they each have their own policies and criteria. 

Let’s say you’re keen to buy your first home. You and your partner in crime (sibling, friend or significant other) have $35,000 saved up, you both work full-time, and you earn $100,000 between you.

  • With Bank A, you might be approved for a $400,000 loan.
  • With Bank B, they may be willing to lend you $385,000.
  • Bank C isn’t prepared to lend you money at all, as they want you to have at least a 10% deposit.
  • Bank D will lend you $400,000, but at a lower interest rate than Bank A.


As you can see, the difference between what you might be approved for can vary widely between different banks. 

This is why having a mortgage broker on your side can be so helpful, as we do all the running around and legwork for you, to find the best deal for you.


The big risk of NOT getting pre-approval

We can also help you get pre-approval so you can go property shopping with confidence. 

Consider the above hypothetical scenarios – and imagine you found the property you wanted for $400,000. 

You signed the contract, subject to finance approval, and went straight to your bank for a loan. Only problem is, your bank is Bank C – so they don’t approve your loan. You scramble to apply for a loan with a different bank, but by this stage the seller has been waiting two weeks. 

They’re not prepared to wait any longer, so they don’t extend your finance clause. You lose the property and it goes back on the market. 

The alternative to this is to get pre-approval BEFORE you start property shopping. You can then make an offer with the knowledge that you have your finance lined up and the sale should proceed without stress.


The other bottleneck: bank’s turnaround times

One thing to keep in mind is that banks are taking longer than normal to provide pre approvals these days, and they’re also taking longer to arrange finance overall and progress to settlement. 

How can you position yourself to get a pre approval within the quickest possible turn around time? 

Firstly, get your finances in order. Review your budget and look for potential issues that the banks might flag with you. These include things like: 

  • Credit card debts – actively try to pay these down and reduce your limits to the lowest possible amount
  • Multiple unsecured debts – if you have several credit cards, can you cancel some accounts, or consolidate them to one single card with a low, manageable limit?
  • Personal loans – these can impact your borrowing power, so work to pay them off as quickly as possible
  • Spending habits – the banks will look at your bank statements very carefully. They are looking for frivolous spending like Uber and UberEats, cafes, restaurants, bars, online shopping, and other lifestyle costs that could demonstrate “poor money management”.


To find out some of the other things you can do before you apply for a pre-approval to help streamline the process and improve your chances of getting a loan, consider contacting an experienced mortgage broker. Our services are 100% free and unlike a bank, we can review dozens of different lenders and loan products to find the right home loan for you and your personal situation.



Louisa Sanghera - Director and Principal Award-Winning mortgage broker at Zippy Financial

Zippy Financial

Louisa created Zippy Financial after a 25-year career in banking, with the goal of using her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients grow their wealth through smart property financing. Whether you are looking to buy your first home, re-finance or build your property investment portfolio, Louisa and her team of experienced brokers can help guide you through the challenging maze of finding & securing exactly the right loan for you.

M: 0414083522 or 1300 855 022
E: louisa@zippyfinancial.com.au

Connect with Louisa Sanghera on LinkedIn



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