What do I need to know when obtaining finance for a property purchase?

Before you walk into a real estate agent’s office, you should understand your own financial capabilities so that you can know where you stand in the negotiation. You should first contact your broker, or better yet, several brokers, so that you can obtain advice on your current financial situation. Once you find out how much you can borrow, you would then know what you can afford to offer. You should also ask your broker to advise you what it is that you need to budget for as a part of your loan application.

Your broker is best placed to give you comparisons between bank offers because they should have multiple contacts into their preferred banks. When choosing brokers, make sure you spread your net wide so that you can also make comparisons between different tiers of banks. Whilst the bigger banks may have faster processing time, they also have a higher interest rate and processing fees.

Once you are certain of your loan serviceability, you should obtain a pre-conditional approval from your preferred bank prior to signing any contract. Although a pre-conditional approval doesn’t necessarily guarantee you an unconditional approval, which is what you need to complete a purchase, it is a good first indication of your ability to purchase a property. To protect you and allow you to walk away without losing any money, make sure that you negotiate a conditional on finance clause into your contract.