“Do you have a house in mind? We have a mortgage for you!” Doesn’t that sound bad? And it could be even better: “It’s time to fly! Become independent! Your house awaits you with your pre-approved mortgage.” You may have seen a similar message referring to a pre-approved loan instead of a pre-approved mortgage.
Although different , both are based on the same premise : access to money more quickly than with a conventional mortgage. This agility is their great advantage, but to avoid disappointment if you apply for one, it is best to be clear about what they are and how they work.
What is a pre-approved mortgage and who offers it?
These are loans offered by banks. to their own clients , whom they know well because they have their payroll deposited, use a bank card, may have deposits...
In short, the bank has enough information to know the financial capacity and solvency of the client or how much money it could lend him. That is why they are called pre-approved mortgages. However, the fact that it is pre-approved is not a guarantee that it will ultimately be obtained.
What is the difference between a loan and a pre-approved mortgage?
One of the differences between loans and pre-approved mortgages is that the former are easier to obtain than the latter. In addition, a loan is usually for a smaller amount and is used to finance projects, renovations or the purchase of goods such as a car, while a pre-approved mortgage is intended for the purchase of a home.
To whom does the bank offer this type of mortgage?
Banks generally offer pre-approved mortgages to “premium” clients who meet certain requirements . What are they? Although each bank has its own guidelines, these are some of the general conditions:
- You should have been with the bank for some time , and not because you've been around for a long time (which is also true). This is how the bank can find out your real financial situation and how you manage your money.
- Have some money saved, which will be used for the down payment because most mortgages cover 80% of the value, whether pre-approved or not.
- Have your payroll domiciled .
Some banks limit pre-approved mortgage loans to customers with a minimum monthly income.
What's different about a pre-approved mortgage?
The main feature of pre-approved mortgages is that they are processed faster. The reason is that the bank already has a lot of information about you that they don't need you to send them.
The procedures are more agile and you can get your mortgage sooner. Of course,
The fact that the mortgage is pre-approved does not mean that there has not been a prior study by the bank , which will review your data again and decide whether to grant you the mortgage and under what conditions. What's more, they could even deny the mortgage.
Similarly, just because everything can be faster doesn't mean the mortgage terms will be better .
How to get the best loan
When looking for the best mortgage, you have to check the offers on the market, the conditions, if there are associated products, if we also need money to renovate the house... One way to do this is with the help of expert professionals who can help you go beyond that pre-approved loan and propose tailor-made solutions, such as mortgages to buy and renovate , if that is what you are looking for, or what you can earn if your mortgage is green.