You should consider the fact that a mortgage broker, is an independent consultant that works for you - for your best interests.

A mortgage broker has access to many lenders, not just one. Black and White Finance has access to 30+ lenders for example.

Australian lenders have different policies, different niches, different rates and it's a mortgage brokers job to work out what is in your best interests when looking to purchase a property.

A mortgage broker has the experience, the knowledge, the relationships with all the different lenders, not just one, to work out with care, what is truly best for you and your situation.

A pre-approval is as the name suggests, an indicative approval from a lender on how much they will lend to you based on your current financial circumstances.

The final approval is subject to other assessment criteria such as the property valuation. This can only be done once you have secured a property for purchase and have exchanged on the Contract of Sale.

The pre-approval will provide a high degree of likelihood that the lender will approve your loan. It is never a 100% guarantee though as some conditions can only be satisfied after securing the property.

The term pre-approval is interchangeable with conditional approval, indicative approval, approval in principle (AIP), home seeker approval

By obtaining a pre-approval, you can have the confidence that the lender has reviewed your information and has indicated that they are able to lend the loan sought. This will allow you to make offers with confidence with shorter finance clauses, making your offer more attractive to the seller.

Also important to note is when a lender fully validates your application, majority will honour the assessment rate at the time of pre-approval. Meaning that if there are future rate rises during the pre-approval period (typically 90 days), your borrowing capacity will remain the same.

Typically, a pre-approval will last 90 days. Lenders will generally allow you extend for further 90 days with minimal document updates (not a full application). Only one extension is usually available.

Not all lenders fully validate your pre-approval. This means that a credit assessor does not physically review your file.

Some lenders will use their software to assess your application rather than a manual assessment by a qualified assessor. This saves them time and workload. This is called a system generated pre-approval. The issue with this method is that some critical information pertaining to your financial circumstance may be missed by the system and provide false approvals.

Once you find the right property and proceed to formal approval, a further/final assessment will be required by a credit assessor. This may result in information which was not identified by the system being questioned and may cause unduly delays or even decline the loan application.

For us at Black and White Finance though this is extremely rare as we will fully assess your application before submitting any application to a lender.

Typically, a pre-approval will last 90 days. Lenders will generally allow you extend for further 90 days with minimal document updates (not a full application). Only one extension is usually available.

Each time we apply or seek an extension on the pre-approval, it will be flagged on your credit file.

Multiple applications will have an adverse impact on your credit file/score. It is therefore important that we fully understand your financial objectives so we may recommend you best strategy to move forward.

We will highlight which lenders are in your best interest and the proceed only with the one lender in your best interest.

Once you find the right property. We can provide property guides (useful & paid for data) which will provide an estimated price guide as well as comparable sales data.

Please only use the estimated value as a guide. What is of better use to you, is to review the comparable sales in the report. When reviewing these comparable properties that have sold, it’s important to pay particular attention to similarities and differences which make these properties inferior, superior, or comparable. Factors such as land size, living space, finishes, aspect, location (busy street vs quiet street), etc, all contribute to determine where your property sits in the market and can help you to understand its value at a granular level.

When you are serious about putting an offer on the property or attending an auction you should have the Contract of Sale reviewed by a licensed Solicitor/conveyancer, arrange for a pest and building report if necessary (should always be done for any house), and obtain copy of strata report if it’s a unit. This due diligence process is extremely important and should not be overlooked.

When you are ready to make an offer on a property. We can provide you with a template on “how to make a formal offer”. We will hold your hand throughout the entire process.

Once your offer is accepted. We will arrange with you and the solicitor/conveyancer to obtain the documents we require to proceed to formal approval.

We will also need to arrange a valuation of the property. This is to ensure that the lender is satisfied to take on the property as security/collateral. A valuation may take the form of an electronically generated valuation, a desktop valuation where the property is not actually inspected but is still completed by an independent valuer selected by the lender or a short or long form valuation where a qualified valuer assigned by the lender will visit the property and carry out an independent valuation on the property to determine the market value.

The valuer will also review the Contract of Sale for the purchased price as well as review comparable sales in the area to determine the market value.