The short answer
Pre-approval is a lender’s conditional agreement to lend up to a certain amount, based on your income, expenses, debts and deposit. How long it takes depends on the lender and how complete your documents are. Many lenders set a validity period, often around 90 days. Final approval still depends on the property and a valuation.
What pre-approval is
When you apply for pre-approval, the lender assesses you as a borrower: your income, living expenses, debts, credit history and deposit. If you fit its policy, it gives a conditional approval up to a set amount. The property comes later, once you find one.
How long it takes
Turnaround depends on the lender, its current workload and your situation. A straightforward application with complete documents may come back within a few business days. Self-employed income, variable income or a more complex situation can take longer. Missing documents are the most common cause of delay, so having them ready is the part you control.
What you’ll usually need
- Identification, such as a driver licence or passport.
- Income evidence, such as recent payslips, or tax returns and financials if you’re self-employed.
- Bank statements showing savings and spending.
- Details of debts, such as credit cards, car loans and HECS-HELP.
Why so much? Lenders must check you can afford the loan. Our guide on why your broker asks for so much information explains.
How long it lasts
Many lenders give pre-approval for around 90 days, and some longer. If you haven’t bought by then, it can usually be renewed with updated documents. Policies and rates can change in that time, so a renewal is a reassessment.
Pre-approval isn’t final approval
Once you’ve signed a contract, the lender values the property and checks it against its policy, then confirms your circumstances haven’t changed. A low valuation, a property type the lender doesn’t accept, or a change in your job or debts can affect the outcome. Speak with your broker before signing anything you can’t get out of, and read the contract with your conveyancer. General information only.
Mortgage broker at My Finance Consultants. Daniel compares home loan options from a panel of 40+ lenders for refinancers, investors and home buyers, by phone or video, evenings included. About Daniel
General information only. It doesn’t consider your objectives, financial situation or needs, and it isn’t tax, legal or financial product advice. Lending criteria, fees and charges apply.