Home loan pre-approval

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 does it mean to be pre-approved for a mortgage?

woman signing a contractMortgage pre-approval is an initial assessment from a lender indicating how much you may be able to borrow. It requires you to submit a brief application, usually online, and provide financial information for the lender to verify.

Some lenders call it pre-approval, conditional approval or approval-in-principle.

But pre-approval does not mean full approval. You may submit a full application later only to be rejected. But pre-approval gives you a better idea of how much you can actually borrow. It means taking the first step, and it shows a potential seller that you're serious about buying.

The smart home buyer arrives at an auction or inspection with a mortgage pre-approval and increases their chances of a successful purchase.

How long does pre-approval last for?

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

Is pre-approval binding?

No. Getting pre-approval doesn't mean you have to borrow any amount of money from the lender. And the lender has no ultimate obligation to lend money to you. But it's a good start.

How do I get pre-approved?

Follow these steps to get your mortgage pre-approval:

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.

Your lender may offer one or both versions of pre-approval, and you might still be able to apply entirely online.

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

What are the benefits of pre-approval?

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, and having a lender's seal of approval in place can help you win a bidding war against others who may not qualify.
  • A pre-approval can also reduce stress by helping to speed up the documentation process once you've found a home.

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.

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.

You should keep in mind that pre-approval doesn't mean you're guaranteed to get a home loan. The following need to happen first:

  • The lender must conduct a valuation of the property and be satisfied that you haven't paid too much
  • You need to provide a contract of sale
  • You shouldn't change jobs halfway through the process

Once your application is approved, your lender will explain all the fees and charges involved in establishing your loan and answer any questions you may have. Once this is completed, 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.

Then it’s time to start managing your loan and, most importantly, this is also the time you get the keys to your new home.

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Rates last updated December 12th, 2019
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Loan purpose
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Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
2.99%
3.01%
$500 (waived for loans above $150,000)
$0 p.a.
80%
Online only cashback offer: Refinancers borrowing $250,000 or more can get a $4,000 cashback for their first application (Other terms, conditions and exclusions apply). Buyers and refinancers can get this competitive variable interest rate. Application fee waived for loans above $150,000.

UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000
2.84%
2.84%
$0
$0 p.a.
80%
Enjoy flexible repayments, a redraw facility and the ability to split your loan. Plus, pay no application or ongoing fees.
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR<=90% Incl. LMI (Owner Occupier, P&I)
3.03%
3.04%
$0
$0 p.a.
90%
Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000.
loans.com.au Smart Home Loan - (Owner Occupier, P&I)
2.88%
2.90%
$0
$0 p.a.
80%
Get one of the lowest variable interest rates on the market and pay 0 application or ongoing fees.
Virgin Reward Me Fixed Rate Home Loan - 2 Year LVR < 90 (Owner Occupier, P&I)
3.44%
3.39%
$0
$10 monthly ($120 p.a.)
90%
Enjoy a competitive fixed rate with no application fee.
Bank of Melbourne Basic Home Loan - LVR above 60% up to 80% (Owner Occupiers, P&I)
2.99%
3.01%
$500 (waived for loans above $150,000)
$0 p.a.
80%
Online cashback offer: Refinancers borrowing $250,000 or more can get a $4,000 cashback for their first application (Other terms, conditions and exclusions apply). A low variable interest rate for home buyers and refinancers. Application fee waived for loans above $150,000.
State Custodians Low Rate Home Loan with Offset - LVR up to 80% (Owner Occupier, P&I)
2.90%
2.92%
$0
$0 p.a.
80%
This loan offers a competitive variable rate and a 100% offset account to help save you on interest repayments.
Bankwest Complete Home Loan Package Variable - $200k+ LVR <=80% (Owner Occupier, P&I)
3.05%
3.50%
$0
$395 p.a.
80%
A low variable rate loan with a 100% offset account and package discounts.
BankSA Basic Home Loan - Promotional Rate (Owner Occupier, P&I)
2.99%
3.01%
$500 (waived for loans above $150,000)
$0 p.a.
80%
Online only cashback offer: Refinancers borrowing $200,000 or more can get a $4,000 cashback for their first application (Other terms, conditions and exclusions apply). Buyers and refinancers can get this competitive variable interest rate. Application fee waived for loans above $150,000.
loans.com.au Smart Home Loan - (Investor, P&I)
3.19%
3.21%
$0
$0 p.a.
80%
A competitive variable investor rate for borrowers with 20% deposits. Low fees, redraw facilities and repayment flexibility.

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Logo for St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)
St.George Basic Home Loan - LVR 60% to 80% (Owner Occupier, P&I)

Online only cashback offer: Refinancers borrowing $250,000 or more can get a $4,000 cashback for their first application (Other terms, conditions and exclusions apply). Buyers and refinancers can get this competitive variable interest rate. Application fee waived for loans above $150,000.

Logo for UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000
UBank UHomeLoan Variable Rate - Discount offer for Owner Occupiers, P&I Borrowing over $200,000

Take advantage of a low-fee mortgage with a special interest rate of just 2.84% p.a. and a 2.84% p.a. comparison rate.

Logo for Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR<=90% Incl. LMI (Owner Occupier, P&I)
Suncorp Back to Basics Home Loan - Better Together Special Offer $150k+ LVR<=90% Incl. LMI (Owner Occupier, P&I)

Get one free online redraw per month and pay no ongoing fees. Application fees are waived for loans above $150,000.

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2 Responses

  1. 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,
      Marc.

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