Before you start looking for your perfect home, it is important to find out how much you borrow and what type of loan is suitable for your needs.  Securing a pre-approval for a home loan gives you confidence, as you will know what your spending limit is.  It also demonstrates that you are a serious buyer - that you have done your homework and are ready to proceed with a purchase.

Process for getting a pre-approval

The process of getting pre-approved can take some time, so it is important that you allow enough lead time with your house hunting. The good news is that the pre-approval requirements are similar to an actual home loan application, so doing a pre-approval will reduce the time and effort required when it comes to the formal application process. You’ll need to provide:

  • Evidence of your income such as pay slips and/or tax returns.
  • Evidence of your savings such as bank statements.
  • Evidence of your current debts such as credit cards, personal loans and home loans.
  • Identification documents, eg a driver’s licence

Once your pre-approval is secured, you are then free to look for a house knowing your limit and armed with extra negotiating power. Once you’ve found the house the (realistic) house of your dreams, you’ll then need to get formal approval from your lender.


(Things to check off before hand)

A pre-approval is not a guarantee of finance, rather it is an indication from the lender that they have assessed your credit worthiness.

Once you have secured a property, the unconditional approval is a new process. There are always a number of conditions that a lender will place on a pre-approval such as:

  • That a Contract of Sale is the same as the pre-approval scenario.
  • That the property valuation is certified.
  • An assessment that the property is suitability - eg: location, features and size.
  • That your personal circumstances such as employment, dependents etc. have not changed.

Benefits of a Pre-Approval

There is a huge upside to getting a pre-approval locked in before you start the house hunting process.

  • You know your borrowing power up front and avoid any risk of purchasing a property that is outside your financial range.
  • Demonstrates you are a serious buyer to vendors and real estate agents.
  • Takes the stress out of house hunting.

Once you've bought your property, a pre-approval makes the formal application much more straightforward, as most of the hard work has been done.