Buying your first home is one of the most exciting and memorable purchases you will have in your life. However, it can be an overwhelming process, so it’s important to get a clear understanding of the difference between Conditional and Unconditional Approval before you make the jump. At Melbourne Finance, we are with you every step of the way. Here is a straightforward breakdown of the difference between conditional and unconditional approval to help you navigate this process.
What is conditional approval?
When granted ‘conditional approval’, it means that your home loan has been assessed and approved subject to meeting a few conditions. These conditions could be recent payslips, bank statements showing your savings history or a requirement that you clear off an existing debt or meet the probation period of a new job you recently acquired. These conditions vary depending on your personal circumstances and will be outlined by the lender.
By meeting these conditions, you should be approved for your home loan but it’s important to understand that conditional approval is approval in principle and as such, isn’t assured.
What is unconditional approval?
When granted ‘unconditional approval’, there are no conditions you need to meet for your home loan to be approved. The lender has assessed all your supporting documentation and believes you are suitable to service the loan. Just bear in mind that unconditional approval comes with an end date of three to six months and that the lender can withdraw if there are any significant changes in your circumstances, such as a change in jobs.
What about pre-approval?
Have you enquired about putting a deposit on a block of land to buy and build? Have you been asked for pre-approval? Pre-approval is the lender giving you the go-ahead and confidence that they are willing to support you in building or purchasing a property. The lender will let you know your borrowing capacity and any conditions you need to meet, such as property valuations or inspection reports.
As a first home buyer, pre-approval gives you the confidence to begin house hunting, bid at an auction, or lock-in that block of land to build your dream home. Pre-approval gives you a sense of security in knowing what you can borrow and purchase.
Is there an expiry date?
All lenders will offer a time frame in which their approval remains valid. This is usually between three to six months, so it is important to act within that time frame and secure your first home.
Ready to apply?
At Melbourne Finance, we understand that buying your first home is a complicated and challenging process. is why it is part of our mission to make buying a house as easy and transparent as possible. Let us help you secure your first home and give us a call on 03 8568 3644.