Pre-approval: how to get home loan-ready in advance | Finder


Getting home loan pre-approval makes the property buying process easier. Here's how it works.

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When a well-organised home buyer is getting serious about purchasing a property, they approach a lender and get pre-approval. It's not a compulsory step, but it gives you a better idea of how much (if anything) a lender is willing to lend you.

What is home loan pre-approval?

woman signing a contractPre-approval is an indication of how much money a lender is willing to lend you for a home loan. It's sometimes called conditional approval, or approval-in-principle.

Pre-approval requires a brief application, typically online (although some lenders require an in-person consultation) involving some identification and financial information.

Keep in mind that a home loan pre-approval is not the same as an actual mortgage. You may even get pre-approved by a lender only to be rejected at the actual application.

Pre-approval brings the following benefits:

  • You can get a more realistic idea of your borrowing power. This keeps you focused on properties you can afford.
  • It signals your seriousness to sellers. Pre-approval strengthens your negotiating position when it comes time to agree on a price. You will be considered a preferred buyer, similar to a cash buyer. This can really help in a tight auction.
  • A pre-approval can also reduce stress by helping to speed up the documentation process once you've found a home.

How long does it take to get pre-approved?

With many lenders offering online pre-approval, the whole process can take hours rather than days.

Online pre-approval is usually a system-generated process that is very quick but doesn't involve a qualified credit assessor reviewing your pre-approval application.

Some lenders may offer this, while others may require a fuller assessment that involves a lender's credit department. This usually involves a credit report.

Get a free credit score check before you apply for a home loan

How long does pre-approval last for?

Most lenders can issue you a pre-approval lasting around between three months. This gives you time to hunt for properties and get your actual application together.

Lenders who offer pre-approval

Not all lenders offer pre-approval, but here's a list of some who do:

How do I get pre-approved?

Follow these steps to get your mortgage pre-approval:

When should I apply for pre-approval?

You should get pre-approval once you've done your initial research. You should already have an idea of your borrowing power, your price range and the areas you're looking to buy in. Once you start looking seriously at properties with the intent to purchase then it is time for pre-approval.

Are pre-approvals recorded on my credit file?

Pre-approvals are recorded on your credit file each time you apply. This can have a negative impact on your credit score if you apply for too many home loans in a short amount of time.

When the lender checks your credit score, your pre-approval application will show up as an enquiry. For instance, it will show:

  • The enquiry date
  • The credit provider
  • The credit amount you applied for
  • The reason for the enquiry
  • The reference number

Lenders up until recently did not know whether applicants had been approved or declined for credit (they couldn't see the outcome of the enquiry). They would just assume that an applicant had been declined, as this would explain why they had applied for multiple pre-approvals.

Today, this information is being slowly collected and displayed in credit files, so this isn't as much of a problem, but applying for multiple mortgage pre-approvals can still indicate to lenders that you are experiencing financial stress.

As a result, lenders may view you as a high-risk borrower and be reluctant to grant you full loan approval.

What comes after pre-approval?

Once you find a property to buy, you need to get full or unconditional approval. This requires a more detailed application. Then you need to provide a contract of sale and the lender must conduct a valuation of the property and be satisfied that you haven't paid too much for the property

Once your application is approved it's time to draw up the loan documents. You’ll need to read your loan contract carefully before signing, and your lender will check that you’ve filled out everything correctly.

Your conveyancer or solicitor can then review the contract of sale, before you and the seller can sign a copy. Once a settlement date has been arranged, your lender will provide confirmation of your loan details. This is also the time at which you can expect to be charged for stamp duty and registration costs.

At settlement the property is yours and it’s time to start paying off your loan.

Need a home loan? Start comparing

Data updated regularly
Name Product Interest Rate (p.a.) Comp. Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
Westpac Flexi First Option Home Loan
$8 monthly ($96 p.a.)
Up to $3,000 refinance cashback.
A flexible and competitive variable rate loan. Eligible borrowers refinancing $250,000 or more can get $2,000 cashback per property plus a bonus $1,000 for their first application. Other conditions apply.
St.George Fixed Rate Advantage Package
$395 p.a.
Up to $4,000 refinance cashback
Borrowers with 20% deposits or equity can get this competitive fixed rate loan. Refinancers borrowing $250,000 or more can get up to $4,000 cashback (Other terms, conditions and exclusions apply).
HSBC Fixed Rate Home Loan Package
$390 p.a.
$3,288 refinance cashback offer
Lock in a low fixed rate for 2 years and buy your home with a 20% deposit. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.
UBank UHomeLoan Fixed
$0 p.a.
This very low fixed rate is only available until 29 April 2021. Other conditions apply. A competitive fixed rate loan with no ongoing fees. Requires a 20% deposit
Westpac Fixed Option Home Loan Premier Advantage Package
$395 p.a.
Up to $3,000 refinance cashback.
Eligible borrowers refinancing $250,000 or more can get up to $3,000 cashback. Other conditions apply.
St.George Basic Home Loan
$0 p.a.
Up to $4,000 refinance cashback
Get this low-rate variable loan with a 20% deposit and pay $0 application fee. Borrow from $150k (or $250k to be eligible for the cashback offer) (terms, conditions & exclusions apply).
Suncorp Home Package Plus Fixed
$0 p.a.
Lock in a low fixed rate loan for two years and get the annual package fee waived in the first year. Available for borrowers with 20% deposits.
Athena Variable Home  Loan
$0 p.a.
Owner occupiers with 40% deposits or equity can get this competitive variable rate loan. No upfront or ongoing fees. Smart Booster Discount Variable Home Loan
$0 p.a.
Home buyers can get a very low discounted variable rate for the first year. This loan has a revert rate of 2.48%. Requires a 20% deposit. Add an offset account for an additional 0.10% on your interest rate.
AMP Bank Professional Package Fixed Loan
$0 p.a.
Get a low fixed rate package with no application or settlement fee. Available with a 20% deposit. Other fees and charges apply.

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2 Responses

    Default Gravatar
    julieAugust 9, 2015

    Can you opt out of getting a loan after you have filled out all the paperwork for the loan and have been given a verbal that the loan is pre-approved subject to the lender (St George) evaluating all the paperwork and doing a valuation of the property in question?

      Avatarfinder Customer Care
      MarcAugust 10, 2015Staff

      Hi Julie,
      thanks for the question.

      Home loan pre-approval is in many cases obligation-free, meaning that you can cancel it if you no longer require it or have found a better deal. The exact nature of a pre-approval agreement differs on a case-by-case basis depending on the lender, so I would recommend contacting St.George directly to find out if you can opt out.

      I hope this helps,