Home loan pre-approval provides a clear indication of your borrowing power, giving you the confidence to search for a property and negotiate with sellers.
Pre-approval doesn’t obligate you to take out a loan – nor does it guarantee final lender approval – it does help you narrow your property search and strengthens your position when bidding.
Key takeaways:
While pre-approval and conditional approval are used interchangeably, approval occurs in distinct stages:
|
Approval Type |
Definition |
Status for Buyers |
|
Conditional Approval |
Lender preliminary assessment based on income, credit, and savings. |
Allows you to shop with confidence; subject to property valuation and final checks. |
|
Unconditional Approval |
Formal loan approval after contract signing and property valuation. |
Final commitment by lender; funds ready for settlement. |
Once conditionally approved, you can confidently search for properties within your target budget. When you are ready to make an offer, notify the agent that you have pre-approved finance to demonstrate buying intent. For private treaty sales, request a finance clause (typically 10 business days) in the purchase contract. Note: Auction bids are legally binding and unconditional.
Once your offer is accepted, you’ll need to pay the contract deposit and send the signed contract to your broker. The lender will value the property, verify remaining documents, and issue unconditional approval.
Contact a broker before making an offer to verify property suitability and receive a free property report detailing recent local sales.
Find out how much you may be able to borrow to purchase property.
Understand how much money you have coming in compared to what you spend using this calculator to help you identify where you could save.
Understand the amount you will need to pay your lender before you apply for a home loan and ensure you can meet your repayments.
Speak with a Loan Market broker to fast-track your pre-approval.
Are pre-approval and conditional approval the exact same thing?
Yes – in most cases, pre-approval and conditional approval are interchangeable terms. Both refer to the lender giving an initial ‘yes’, based on a preliminary assessment of the borrower’s financial situation. It’s important to note that this approval is conditional – it’s not a binding loan offer, and final approval depends on several factors being confirmed..
Why might a conditional approval application be declined?
Common reasons include insufficient income, employment instability, poor credit history, high existing debt levels, or inadequate genuine savings.
What happens if interest rates rise while I am pre-approved?
Minor rate increases are usually covered by the lender’s serviceability buffer. However, significant rate increases or changes in personal income can alter your final borrowing capacity.
What deposit do I need when an offer is accepted?
Auction purchases generally require a 10% non-refundable deposit on auction day. Private treaty sales vary, often requiring an initial holding deposit followed by the agreed contract balance.
