 My name is Natasha Champion and I'm a regional sales manager with Uber Home Loans. I work with real estate agents and buyers alike to ensure that purchases are pre-qualified before they start shopping for their dream home and once they have found it, we're here to ensure they get the best deal on that home loan. Today I'm chatting to Willem Camolo, an area specialist for Pam Golding properties based in the Danephone area. We're going to chat a little bit about the ins and outs of pre-qualifications, some queries or concerns that buyers might have and why it's a great idea to always get pre-qualified. Hey Willem, great to catch up with you. Hi Natasha, good to see you. So we're chatting about pre-qualifications today so I think let's jump right in. Can you show your experiences from an agent's perspective as to why you would encourage your buyers to do a pre-qualification before they start shopping around for a home? Well there are a number of reasons why we encourage people to get pre-qualified. So the main two are your credit score and also just to assess your affordability. So credit score is important because that helps us to know if you're in a position to start looking for a home and also helps with the interest rates down the line and your affordability helps us to know what price bracket you should be looking in so that you're not looking at properties that are above your price range with monthly repayments that you can't afford. Let me expand on that credit score a little bit more. Because we work with all the banks we understand the importance that the credit score holds in determining the success of the bond application. So generally it's going to be a score between 0 and 900 depending on the bureau. The bank's cut off is 600, anything less than that the client's considered too big a risk for the bank to do business with. In terms of the better the interest rate is the higher the chance of success and also the greater the chance of a preferential interest rate linked to that deal. That's why it's so important to understand your credit score from the get-go. So the higher your credit score the better your chance of approval and also the better your chance of a preferential interest rate. That's why it's so vital to understand your credit score. I can't tell you how many times I come across buyers who are looking for their first home and get really excited by the process and going through show days and doing all their research and only to get disappointed by their credit score. Knowing your affordability is also really important so that you know what price bracket to shop in because buyers shop around and they fall in love with the home and to only have that taken away because you can't afford it is also a tough process. So it is very important to know what you can afford to avoid disappointment down the line. You know absolutely it can be a very exciting emotional experience home buying but it's very definition and to go through as you say that whole process and and and only to be disappointed there ways around that let's do the homework up front. That's why whenever I meet buyers whether they're putting out feelers or they're more serious buyers I do suggest that they either go onto the uber home loans website to do your DIY online pre-qualification or to go through one of your uber consultants who will look at their expenses and income the same way a bank would. And do you find the buyers are preferring that the do-it-yourself online tool or the traditional manual process with with a consultant? So in my experience the guys who are still early in their search like to do the online DIY version in their own time but the more serious buyers do want a bank's eye view as it were with the actual uber consultants. So we also find both interestingly enough earlier on in the process they do prefer the the do-it-yourself tool and then once they are getting closer to signing an actual offer to purchase they're ready to provide all the supporting documents and have an in-depth analysis done just before they actually sign that offer and then purchase that property. So these days we actually find that sellers are also looking at pre-qualified buyers so and it makes sense because basically what it means is then we're only showing the property to people who are qualified and it gives that seller a piece of mind of that because the worst thing that can happen is that we go through the entire process of accepting an offer and starting to go through all of the sales things that we do after that and only have that fall through because the buyer can't afford it for instance and also importantly another point would be in an instance where say we have two offers the seller is likely to accept the one that has a pre-qualification on it because of the things that we've mentioned previously and it just avoids time wasting and having to go back on to the market and remarket the property and basically start from scratch. I think it's so interesting to remember how many parties are involved in a property transaction and how much work is involved by all those parties the seller certainly from both a security perspective and in these days as you say with tracking and tracing to to have control over who is entering that home and to have an idea of a deal that's going to go through. So also a question that I'm often asked is the amount on the certificate guaranteed and if it's not is there any point in actually getting a pre-qualification? So there are two ways that a bank assesses a loan and if you think of a paragraph it's really aligned straight in the middle credit score and affordability if we tick those two boxes we're there so because we do a credit score and pull a report and because we do an affordability assessment we generally are covered so it's not a guarantee but it does mirror the bank's way of assessing an application firstly credit score secondly affordability so the only things that I can think of that would impact the success of the bond application as it relates to the pre-qualification would be from an affordability perspective have have the clients have the clients taken on any additional credit have they changed their financial commitments since we first issued the certificate you know number two has the bank found value in the property so remember that property is going to be the bank's security and so such time as that bond is paid off so if the value isn't found in relation to the purchase price that could be a challenge you know banks from time to time also change their their credit policies and their assessment policies and their scoring issues so if that also happens in the interim that amount could change slightly so are all pre-qualifications created equal so most most pre-qualifications most pre-approvals will take into account income and expenses so they'll cover affordability but not a lot of them are actually linked to to a credit check as well now we discussed the retention earlier the banks are going to use your credit score to assess the risk you pose as a lender so not only is a poor credit score a disadvantage but some clients have no credit score at all based on the fact that they've never taken out credit having no credit score at all will will be an issue for the banks because they won't have any frame of reference in terms of of assessing your credit risk so luckily we can work with a client with no credit score it just means that that client isn't necessarily ready to buy right now so how would someone go about building a credit score from scratch or even begin to fix it if damaged so for sure i think when when people have got no credit score it's actually quite ironic because those people are generally quite voluntary responsible and they haven't taken out credit because they don't they'd prefer not to have credit but because we need a frame of reference the the first thing i would suggest would be for a person to open either a cell phone account or small retail accounts make sure they pay that account on a monthly basis in full and on time more importantly so that's going to give the banks an idea of financial responsibility if they can pay slightly extra even better but as long as they're paying the minimum amounts in full we'd have we'd be able to reassess that client in a couple of months time and a credit score would have been built up so for those clients you know previously with with credit score issues whether it be linked to to payment profile late payments you know i would encourage them first and foremost to make sure that they don't take on more debt even if it is to consolidate their existing debt definitely don't undertake any more debt and be disciplined enough to again pay the full minimum repayment every month and on time you know any extra funds that they can that they can plow into their debt and close accounts even better and then certainly save money in terms of of putting every extra cent that they've got into firstly servicing that debt correctly and secondly paying off as much as they can we'd also be able to reassess those clients in a couple of months time yeah and it's hard to see clients go through the process of pursuing a home only to have credit score messed it up and then have them feel that they'll never be able to buy a home how early in the process should someone start assessing credit score or even get pre-qualified i would say the sooner the better as soon as you think you're ready to embark upon a property purchase and before you even start looking around for homes connect with someone that can partner with you and support you from a financial perspective and prepare you as soon as we can can engage with that client and if the credit score is poor or if there's a credit score we need to build up we've got time in order to make that happen so it's also important to remember that our pre-qualification certificate has got a three months shelf life so if the client hasn't found a property in that time we'll revisit them and make sure that pre-qualification is up to date okay great so one thing that i do get a lot from clients when i'm telling them about pre-qualification is they ask is the credit check going to affect their credit score and i know there's high check soft check and all of that could you explain that for us please sure so the DIY tool the online tool that we've got is is not going to leave a score will be provided so it won't be a detailed report so that's what's known as a soft check and that's not going to leave a mark on their credit profile at all and remember once we go to the banks the banks are going to individually do credit checks for that client and that's what's going to leave a mark on the client's credit score okay great well that pretty much covers it from my side in terms of what i get asked by buyers when it comes to pre-qualification should we open it up to q and a to visitors of the expo great let's do that if anyone has any questions for either myself or villum please let us know