Why bother getting a mortgage pre-approval? Well even if you’re walking around with a 50% deposit (a super low LVR) and a big income to support any lending you want, it still pays to consider getting pre-approval with your bank of choice or the bank suggested by a mortgage adviser with access to all banks.
To create an advantage for yourself, when negotiating on a property and bidding against other potential buyers, if you can get a property under contract without a finance condition where others need to check that their finance will be approved, you can win the property simply through having fewer conditions. The agent will not worry your finance is not approved and the property is needlessly tied up under contract for 10 days.
When getting pre-approval there is always a chance the bank might decline you based on things you have not anticipated like bad account conduct like overdrafts and missed payments, too much other debt, too many loan facilities already, unpredictable income. Every factor that works against may also mean the bank adds various conditions to your pre-approval. What may be of concern to you is getting the biggest approval possible, not necessarily to maximise your lending but to make sure you do not miss out on your dream home simply because somebody out-bid you by $10-15,000.
What you might not know is banks will have different ways of figuring out how much they would lend you based on your number of cars, age, income, income types, the number of dependents etc and your borrowing power might be $100,000+ or higher by going to another bank. Take the online mortgage snapshot to figure out your borrowing power and complete the full form not just the short form to find out what bank and how much you can get.