It’s no secret that Perth is currently going through another property boom. Just like in 2020 during the Government Grants, it’s becoming harder to secure land, prices are increasing, and there’s a need for urgency for many involved.
Understanding what’s required for your finances will help you navigate this busy period. You can read some of our top finance tips when building in a boom!
Get your finance sorted (even if you’re not ready yet)
In a normal market, you have more time to get your finance organised. It’s common to have up to 90 days after signing your land contract to organise your build contract, apply for finance, and receive your finance approval.
But things move a quicker in a hot market. That 90 days could be reduced to 45 days or even less (it depends on the developer or land agent). You may think that your finance will be clean and easy, but sometime things pop up (like an old debt). It’s better to be proactive in speaking with a mortgage broker or bank earlier in the process so you can avoid any surprises.
You’ll need an LOE or Finance Pre-Approval
An LOE is a Letter of Eligibility that your bank or mortgage broker provides you with after they’ve assessed your borrowing capacity. It outlines that you can apply for a home loan.
A Finance Pre-Approval (aka Conditional Approval) is similar to an LOE, but is more formal. It indicates that you are more serious about applying for a loan.
Both of these documents do not confirm that a bank will lend you money. Instead, they are an indication that a bank is likely to lend you the money.
Nearly all land developers and agents will require an LOE in a hot market like what Perth is currently experiencing. But some are requiring a Finance Pre-Approval instead, so make sure you’ve got all the paperwork required.
If you’re looking at building, you probably have plenty of questions. Online research is a great tool, but if you’re struggling to find an answer to your questions you can fill out the form below and we will reach out.