Getting a pre-approval whilst selling

Hi All

Hubby and I are looking at buying another IP and will be seeking a pre-approval shortly. In the interim we are selling an IP (ex-PPOR) with contracts due to exchange in the next few days. Settlement however won't be until early May. The contract will be unconditional (cooling off periods waived and no conditions at all). I believe we would have a reasonably healthy application even without this sale, however we are keen to maximise our pre-approval. The property being sold is also now vacant, so no rental income to help offset the existing debt. Once we have the exchanged sales contract how will the banks view the debt on this property when assessing any pre-approval application?

On a related note...we are considering a few options for our next IP. Depending on the nature of our purchase we may choose to put the IP in hubby's name (high income earner), or in my name (nil income) with hubbby as guarantor. What is the best way to approach the pre-approval? Given the long lead times for finance approvals at present we really want the security of knowing we have a pre-approval in place. We don't however want to tarnish our credit records with preapprovals that aren't converted to a loan. Are we locked into making our best guess as to our most likely buying entity and just opt for the pre-approval application to be in that name?

Any help greatly appreciated. Thanks.
Angela :)
 
Just give your bank a copy of the exchanged contract and they will assess your application as if the property has already sold and the mortgage against it cleared. Your pre-approval would probably be subject to prior or simultaneous settlement of the sale.

As far as the structure for your next IP goes it doesn't really matter that much if it's going to be one of the options you are considering. Pick the structure you think most likely and get it pre-approved. After you speak to your accountant and decide on the structure you can always amend the pre-approval.
 
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