Mortgage Pre-Approval — What It Is and How to Get It

Pre-approval (sometimes called conditional approval or approval in principle) is an assessment by a lender of how much they would lend you, based on a review of your financial situation — before you have found a property. It is one of the most useful steps you can take before starting your property search.

What Pre-Approval Gives You

• A realistic budget: You know how much you can borrow before falling in love with a property that is out of reach
• Auction confidence: Bidding at auction without pre-approval is risky — unconditional contracts mean you are legally committed to complete. Pre-approval confirms you have the finance to proceed.
• Negotiating position: Vendors and agents know pre-approved buyers are serious and able to move quickly
• Time savings: The upfront assessment identifies any issues (income documentation, credit problems) before they derail a specific purchase

Pre-Approval vs Full (Unconditional) Approval

Pre-approval is conditional — it is the lender's in-principle agreement to lend, subject to a specific acceptable property being identified and a final assessment at the time of purchase. It is not a guarantee. A pre-approval can be declined at the full application stage if:

• The specific property does not meet the lender's security requirements
• Your financial circumstances have changed (you changed jobs, took on new debt, or your income dropped)
• The lender's policies changed between pre-approval and formal application
• A valuation of the property comes in below the purchase price

Full unconditional approval only issues once you have a specific property under contract and the lender has completed all final checks including valuation.

How to Get Pre-Approved

The process involves submitting essentially the same documentation as a full application:

• Proof of identity (passport, driver's licence)
• Proof of income (payslips from last 3 months, group certificate or tax return)
• Last 3–6 months of bank statements (all accounts)
• Details of existing debts (loan statements, credit card limits)
• Details of assets (savings, investments, superannuation)
• Rental history if applicable

For self-employed borrowers, add two years of tax returns, financial statements, and BAS statements.

Hard vs Soft Enquiry — Credit File Impact

Pre-approval involves a credit check. Most lenders do a full (hard) credit enquiry at pre-approval stage, which appears on your credit file and can slightly reduce your credit score. Multiple hard enquiries in a short period (if you are shopping between multiple lenders simultaneously) can have a more noticeable impact. Some lenders offer a "soft" preliminary check that does not appear on your file — ask about this if credit file protection is a concern.

How Long Pre-Approval Lasts

Pre-approvals are typically valid for 90 days. Some lenders extend to 120 or 180 days. After expiry, you must reapply — and your financial assessment will be repeated at current policy (which may have changed). If you have not found a property within the pre-approval period, renew promptly rather than letting it lapse, particularly if you are attending auctions where having a current pre-approval matters.

Tips to Maximise Your Pre-Approval Amount

• Pay down or close unused credit cards before applying — each $10,000 of credit card limit reduces borrowing capacity by approximately $40,000–$50,000
• Avoid making any large purchases on credit or taking new loans in the 6 months before applying
• Stabilise employment — being in the same job for at least 12 months is preferred; being on probation is a red flag for many lenders
• Reduce your declared expenses to actual levels — many borrowers over-estimate expenses when asked, unnecessarily reducing their assessed capacity
• Increase your deposit savings — a larger deposit signals financial discipline and can qualify you for better rate tiers

Related Guides