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Home loan pre-approval: how it works and how to stop it falling over

Pre-approval gives you a budget and confidence at auction, but not all approvals are equal. Here's how to get one you can rely on.

Ram LakshmananUpdated 3 minute read
In this article
  1. Not all pre-approvals are equal
  2. Why approvals fall over
  3. How long does it take?
  4. Buying at auction
  5. Frequently asked questions

Key takeaways

  • Pre-approval is conditional: the valuation and final checks still have to pass.
  • A fully assessed pre-approval is more reliable than an automated one.
  • Approvals usually last around 90 days and can often be renewed.
  • Don't change jobs, take on debt or make large purchases before settlement.

Pre-approval, also called conditional approval, is a lender's indication that it will lend you a certain amount, subject to conditions. In a competitive Sydney market it's close to essential: it tells you what you can spend and shows agents you're serious.

Not all pre-approvals are equal

Some lenders issue pre-approval automatically based on basic information, with little checking. Others have a credit assessor review your full application and documents. The second type takes longer but is far less likely to fall over once you've found a property.

Why approvals fall over

  • Valuation shortfall. The lender values the property below the price, leaving a gap.
  • Property type. Small units, unusual properties or certain postcodes may be outside the lender's policy. See our guide to apartment lending rules.
  • Changed circumstances. A new job still on probation, a new car loan or a missed payment can all change the answer.
  • Expired approval. Most last around 90 days.

How long does it take?

An automated pre-approval can take a day. A fully assessed one often takes several days to a couple of weeks, depending on the lender. Having your documents ready speeds things up.

Buying at auction

Auction purchases are unconditional, so there's no finance clause to protect you. Before bidding, confirm the property type suits your lender, get a building and pest report, and ask whether a valuation can be done before auction.

Ready to start? Learn about our pre-approval service or try the borrowing power calculator first.

Get a pre-approval you can rely on

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Frequently asked questions

Applying for pre-approval usually involves a credit enquiry. That's why we compare lenders first and apply once, rather than applying with several lenders.

Yes, including through participating lenders for the 5% Deposit Scheme if you're eligible.

This article is general information only and doesn't consider your objectives, financial situation or needs. Scheme rules, thresholds and lender policies change; figures are current as at the date above. Read our disclaimer and Credit Guide.

Ram Lakshmanan

Written by

Ram Lakshmanan

Founder & Mortgage Broker, Lend Secure. 25+ years across financial services, business management and customer service. Credit Representative 580706.

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