The purpose of pre-qualification is to determine how much a buyer is eligible to borrow – and thus the size of home loan for which they are likely to be approved.
When an estate agent has to “sell” a property three or four times in order to find a buyer who can qualify for a bond, it is not just a waste of time for that agent, but stressful for the property seller – and disappointing, or even embarrassing, for prospective buyers who do not qualify.
The solution is for buyers to obtain bond pre-qualification, says Carl Coetzee, chief executive of home loan originator BetterBond.
“A pre-qualification is not a ‘guarantee’ a loan will be approved, but it does offer many benefits, including it helps buyers narrow their home search to properties they know they can afford.”
It also gives them more chance to find their perfect home, while knowing they won’t have to scramble at the last minute to source a loan to finance their purchase.
Furthermore, pre-qualification serves as a strong indication to home sellers they are dealing with a serious buyer who has the means to complete the purchase.
In other instances, Coetzee says, applying for home loan pre-qualification can indicate to buyers they need to improve their financial position or credit record before they can begin looking for a home.