There can be some confusion from buyers with pre-approvals and approvals of home loans, with many thinking that a pre-approved loan equates to a certain and guaranteed approved loan. Unfortunately, this is not always the case. A skilled a dedicated buyer's agent working hand-in-hand with your finance broker can help to ensure that you are not one of the unlucky few for whom a pre-approval does not become an approved loan. Read on to find out some of the reasons why your loan might not be approved.
The bank's valuation does not match the purchase price
This can occur because the buyer has paid too much for their property. Buying a property through a buyer's agent ensures that a buyer does not pay more for the property than what it is worth. If the purchase price is significantly more than what the property is actually worth, the bank cannot provide all of the finance for the property. Another situation that can occur is that the property has major structural or foundation problems, or other major repairs, that may mean that the property is unlivable for a period of time.
A material change in the buyer's financial situation - particularly an increase in debt, such as credit card debt, taking on other loans such as a car loan, personal loan or business loan - may all impact the amount that a bank is willing to lend to a buyer. In particular, from time-to-time, a buyer's financial situation can change in the period that elapses between submitting the original finance application for pre-approval and then actually getting an approved loan. The best way around this is to constantly keep your finance broker abreast of any changes in your financial situation, including and especially, situations where you have taken on additional debt.
Documentation is late or incomplete
Banks require certain documents to be completed accurately before they can process and approve a loan. It is critical for a buyer that their loan documents and complete and submitted in time.
Changes to your earned income
Your loan may be refused if your income changes significantly at any time during the application process. Those who are most at risk are people who are in-between jobs (ie, employed when they applied for their loan, but in-between jobs when the loan approval process commences), people who are self-employed and casual employees.
How I help my clients
At Melissa Maimann Buyer's Agent, I have a skilled and dedicated team of finance brokers whose expertise is honed and well-respected. Working closely together, we ensure that our clients' loans are approved and that our clients are kept abreast of the developments with their pre-approval and approved loan. We work to ensure that our clients are approved and that they settle and move into their home sooner.