One question that has been asked quite a few times recently is “Can I use flongle to get a pre-approved mortgage?”. The answer is YES. The next question is usually “Does my contest fee cover multiple contests if… my pre-approval lapses or …my purchase price and loan amount are really different?” The answer is also YES.
How to run a mortgage contest for pre-approval only.
Simply run your contest as if you already had your dream property based on the amount you expect to spend and the deposit you expect to have, then, when you’re ready, connect to the best deal in your Contest Results to arrange the paperwork and your pre-approved mortgage deal.
If your pre-approval expires, or your property or loan amount change dramatically, don’t worry, you can run a new contest for FREE.
To run a new contest for FREE, simply login to your account, clone your old contest, update the bits that have changed then contact us to arrange a credit.
Why re-run your mortgage contest?
If enough time has passed that your pre-approval lapses, or your loan to valuation ratio changes (i.e. you borrow more or spend less), your ideal lender, loan and pricing can also change, so what what seemed like the right idea a month or two ago, may be outdone today. This is especially true if you are interested in taking a fixed rate, or your loan amount to purchase price ratio (the “Loan to Valuation Ratio” or “LVR”) is above 75%.
However, if you are interested in a variable rate, your loan amount and/or LVR has not changed by more than say 5% since you made your pre-approval application, the proceeding on an existing pre-approval from your mortgage contest should be fine. If you are the slightest bit unsure, please do not hesitate to contact us to speak with an independent mortgage adviser about your situation
What is a pre-approved mortgage and why should I get pre-approval?
A pre-approved mortgage, sometimes called a “conditional approval” or simply “pre-approval” is where a lender takes an almost complete loan application and tells you whether, based on the information you have provided your loan will be approved.
A pre-approved mortgage helps give you the confidence that when you find the right property, your loan will be approved. However it is important to understand that pre-approvals are not indefinite an usually expire in about 90 days.
More importantly, pre-approvals do not guarantee your loan will be approved. The main reasons for this are:
- If you borrow more than 80% of your property’s value, you will require Lenders Mortgage Insurance, so the Insurer has final say over whether your loan is approved;
- The property may not be acceptable to the lender and/or mortgage insurer as security – see Elevated Pre-approved Risk Factors;
- The level of checks done by different lenders varies.
Elevated Pre-approved Risk Factors
The chances of your final approval hitting a cost or approval obstacle if you expect:
- to borrow 75% or more of the purchase;
- are purchasing in or around the CBD;
- to buy;
- an apartment with floorspace less than 50 sqm;
- rural residential, mixed commercial property;
- a serviced apartment;
- your LVR may vary by 5% or more (LVR = (Purchase Price – Loan Amount) / (Purchase Price) x 100*
If you are the slightest bit unsure, please do not hesitate to contact us to speak with an independent mortgage adviser about your situation
*Some lenders may not accept purchase price as the property value if buying at auction. If you intend to buy a property at auction and you expect your LVR to be greater than 75%, make sure you have the property valued before you go to the auction and bid.