Before starting their Gold Coast property search, many buyers assume that getting a desktop finance pre-approval online means they’re ready to make offers. But is it really enough?
The short answer: Not if you’re serious about putting yourself in the best position to secure the right property as soon as you find it. We spoke with Mortgage Broker Steve Dionysius to find out why.
What is a Desktop Finance Approval?
A desktop finance approval is a preliminary assessment conducted by a bank or financial services provider based on basic information you give to a lender. It’s often generated automatically and gives an estimate of how much you might be able to borrow. However, it’s not a full loan approval, and it hasn’t been verified against all lender criteria.
Why Desktop Approvals Aren’t Enough
While a desktop approval can give you a ballpark figure of the money you might be able to get access to for financing, it has several limitations that could create issues when you’re ready to buy:
- It’s not fully assessed – Desktop approvals don’t take into account all factors, such as a deep dive into your financial situation, credit history, or the specific property you’re buying.
- No guarantee from the lender – Because it’s a quick estimate, the bank isn’t committed to lending you the amount stated in a desktop approval.
- You could be overestimating your borrowing power – Many buyers find out later that they actually qualify for less than their desktop approval suggested, leaving them scrambling to adjust their budget.
- Sellers and agents prefer fully approved buyers – If you’re competing against buyers who have full bank finance approval, your offer may not be taken as seriously.
- You risk losing your dream property – If you make an offer with only a desktop approval and later can’t secure the necessary finance, you could lose the property and even risk losing your deposit.
What You Really Need: Full Bank Finance Approval
If you’re seriously house hunting, a full bank finance approval (also called formal or unconditional approval) is the best way to position yourself as a strong buyer. Here’s why:
- Stronger negotiating power – Sellers and agents are more likely to take your offer seriously when they know your finance is fully approved.
- Faster buying process – With finance already secured, you can move quickly when you find the right property.
- No last-minute surprises – A full approval means the bank has already assessed your financials, so there’s no risk of being declined later.
- Confidence in your budget – Knowing exactly how much you can borrow helps you focus on properties within your price range.
According to Steve Dionysius, an experienced mortgage broker from Venro Finance, a desktop approval might be helpful to give buyers a sense of what they can afford, but it’s not a commitment from the bank and should never be taken as such.
According to Steve, “If the lender hasn’t fully assessed your financials, you could run into trouble when it’s time to make an offer. I always recommend buyers secure full bank finance approval before they start seriously looking. It puts them in the strongest possible position to negotiate and ensures there are no surprises down the track”.
Do you still need a finance clause in your sale contract if you’re pre-approved?
Even if you have a full finance pre-approval, we will usually still recommended that you include a finance clause in your sale contract. Here’s why:
- Lenders still need to approve the property – A finance pre-approval is based on your financial situation, but the lender also needs to assess the property you’re purchasing. If the property doesn’t meet the lender’s criteria (e.g., valuation comes in low, structural issues, zoning restrictions), your loan may not be approved.
- Unexpected financial changes – If your financial situation changes (e.g., job loss, taking on new debt, changes to lender policies), your loan approval could be affected.
- Protecting your deposit – Without a finance clause, if your loan falls through, you could be at risk of losing your deposit and facing legal consequences for not settling on the property.
Steve Dionysius’ advice?
“Even if you’re pre-approved, it’s wise to include a finance clause unless you’re 100% confident in your financial position and the property’s valuation. It’s an added layer of protection that can save buyers from costly mistakes.”
House hunting is exciting, but it’s also competitive—especially in a hot market like the Gold Coast. Don’t let a desktop approval hold you back from securing a home that meets your brief. Get fully approved first, and when the right property comes along, you’ll be ready to make a strong, confident offer.
Like some guidance on your Gold Coast property search? Get in touch with Matt today.