Confused about home loan pre-approvals? Follow these four steps.

Ready to buy a property? You’ll need to show the seller you have enough money. For most
people, this will mean getting a loan, and the first step to getting one is obtaining pre-approval for it.

Pre-approval – also known as conditional approval or approval in principle – is an indication from a
lender as to how much you can borrow. If you have pre-approval, vendors and agents know you’re
serious about buying. Here are the steps you need to follow.

1.Gather your financial information

To get an idea of how much you can borrow, and therefore what you can afford to buy, you need to
give the lender a comprehensive picture of your finances. This includes your income and assets,
and your financial obligations such as existing debts and living expenses (including ongoing bills,
entertainment, food and car expenses, etc).

You'll need evidence of everything:

• Pay slips and tax returns for your income.
• Title deeds for tangible assets (i.e. physical items such as buildings, machinery and inventory), and portfolio statements for intangible assets (non-physical items such as copyrights and patents).
• Loan statements for existing loans.
• Credit card statements showing your credit limit.If you already stick to a budget and have a regular savings history, you may want to provide bank statements to demonstrate this.

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You can use all of this information to get an idea of how much you may be able to borrow. There
are a number of free mortgage tools and calculators that can help.

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