why obtain pre-approval?

home loan advice for first-time buyers

by John Pierre Saliba, April 23, 2017


There is one thing that human beings love in life, and that is certainty. There was a story about a soldier who was captured behind enemy lines. The captain approached the prisoner and offered him two options. Tomorrow at 6 am you can either face the firing squad, or you can walk through a door that has unknown horrors.

After deliberating, the prisoner of war decided against going through that door and chose the firing squad instead. After the shots rang, a soldier asked the captain, what was behind that door? the captain replied “freedom”.

The moral of the story is that some people fear the unknown and hate uncertainty. Now you may think what does this have to do with getting a Pre-Approval with a bank? Well, let me tie it all up.

A Pre-Approval is a letter from the bank stating that they are willing to lend you a certain amount of money, given that you agree to their terms of the contract. The terms may include, that the loan to value ratio cannot exceed a certain number, the security of the property has to be adequate enough, nothing has changed in your circumstances etc. A Pre-Approval is usually done via a broker or the bank directly. (Better to use a broker as they have

The advantages of seeking a Pre-Approval are:

  1. You have an understanding of your borrowing capacity. This will allow you to set a limit on how much you can bid at auction and not get carried away.
  2. No surprises when it comes to applying for a loan. A Pre-Approval, will identify any credit risks you may have. E.g. any unknown defaults, infringements etc. Having a default or a judgement against you can severely impact your ability to obtain a loan.
  3. A Pre-Approval will give you the confidence to bid, knowing that you are already approved for a certain amount!
  4. Last but not least, a Pre-Approval will give you C E R T A I N T Y. It will give you certainty to know that your finance has been organised, you will have a better idea of what property to look for as you won't be wasting time looking for homes outside your price range and once you finalise your purchase, you will only have yo focus on the purchase rather than having to sort out your finances and worry about being approved or not after the properties have been exchanged.

I have seen first-hand the stresses that many people have gone through when they have purchased property without a Pre-approval and I have also seen how relaxed people are who have purchased with a Pre-Approval.

If you are serious about investing in property, a Pre-Approval will give you the confidence you need to break into the market. Speak to our Mortgage Experts today to find out how we can help you.

This article is general in nature and does not constitute any advice.

Written by John Pierre Saliba