Why a property inspection is so vital for lending
Buying a home can be great – but generally you won’t be able to get one without finance. That’s why understanding what banks are looking for when they give a mortgage will stand you in good stead for starting on your property buying journey. Whether you’re seeking a mortgage from a bank or through a mortgage broker, you may be asked to provide a property inspection report that proves your chosen house is in an acceptable condition. It may seem slightly time-consuming and unnecessary, but you need to make sure that not only the bank is happy with the loan going ahead, but that you can also be assured you are making a fully informed decision.
Getting a property inspection
Just because a property looks perfectly sound and acceptable doesn’t mean it is. Homes can have issues hidden to the untrained eye, which is why you’ll want to get any property you’re interested in buying inspected by a professional building inspector. A home is usually the biggest purchase you’ll make, so make sure you’re choosing the right home – one that won’t give you unnecessary grief in the future!
The bank cares as much as you do
For a bank to lend up to 90% of the value of a property, they want to know that nothing will stop you from keeping up with your future home loan repayments. If your newly purchased home is quickly in need of expensive renovations, you may need to borrow more money. Likewise, if a home is uninsurable and anything happens, you (and the bank) could end up losing out on a huge amount of money.
While the bank can repossess your property should you become unable to continue paying off your mortgage, they don’t really want to. It’s a liability for them to own a property and an unnecessary hassle to have to sell it. Instead, they want to avoid this possibility altogether by having home loan applicants provide a property inspection report. This ensures they don’t lend you money to purchase a house which is going to give both of you stress!
Requirements for lending
Different banks have varying requirements for a home loan. Some of these policies might be better for you than others, depending on where you’re at. Make sure you do plenty of research about loan requirements to figure out what’s best – you don’t necessarily have to apply through your normal bank if another is more suited to your current needs. You could also approach a mortgage broker who deals with a large number of lenders and could save you time researching around.
Banks have different views on what a sound property is. While some banks won’t loan against a house with a worrying inspection report, other banks also won’t approve a home loan for a house that is in an ‘unusual’ location, will be very expensive to insure, or that would only appeal to a very small, niche market. Make sure you chat to you your chosen lender about their individual policies to get a better idea of what is best for you and what to expect.
Bear in mind that, even with all of these precautions in place and the care you’ve likely put into your application, getting a home loan is a privilege, not a right. Lenders may still decline your mortgage application despite everything being almost perfect. Regardless of whether your application is declined or accepted, you still want to know that a house you are seriously considering purchasing is in a safe and reliable condition. Getting a house inspection from a reliable property inspector is a crucial step in your home loan application process.
Get a free quote for your property inspection report today.
