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The ins and outs of home-loan pre-approval

By Emma Smith


Making offers on property without without home loan pre-approval is like filling a trolley at the supermarket without any money to pay for it. While you may be lucky, there’s a good chance that your bank will decline to finance your purchase after you’ve made an offer, leaving you in a sticky situation.

Luckily it’s fairly easy to secure home loan pre-approval with the help of a professional mortgage broker. Here’s what you need to know to get started.

If lenders can see you have the ability to sensibly manage your money, they’ll be more likely to approve your loan.


Home loan pre-approval is an indication from your lender that you would be approved for finance up to a certain amount if nothing changes. It allows you to bid with confidence at auctions and make offers on property, knowing that the bank will most likely approve a loan to finance your purchase.

This pre-approval is usually free and valid for three to six months, plus having it may make your formal approval easier when it comes time.


The first thing you should check before going for pre-approval is your credit report. This includes details of your past debts, including all loan applications, late payments, bankruptcies and repayment history. Your lender may assess your credit score and deny your application for pre-approval if they don’t like what they see.

You should aim to have as much savings as possible when you apply for pre-approval.

You can see yours online for free with a credit reporting agency like Dun & Bradstreet or Equifax. Note any areas you could improve, check for errors, and have them fixed by contacting the agency. Consolidating your debt into one loan and working to repay it as quickly as possible may help clear up your credit report.

In addition to checking your report and paying down debt, you should aim to have as much savings as possible when you apply for pre-approval. If lenders can see you have the ability to sensibly manage your money, they’ll be more likely to approve your loan.


The home loan pre-approval process might involve meeting your lender in person, speaking on the phone, and exchanging documents. To make sure you’re ready for this stage of the process,  have the following on hand before you get started:

  • A completed application form: And supplementary forms.
  • Identification: A passport or drivers license will do.
  • Evidence of income: Such as tax returns or pay slips.
  • Record of savings: Such as bank statements.
  • Evidence of any current debts: Such as  credit card statements.

If you’re a little lost on the specifics of what you need, speak to a mortgage broker before you start the process. They can help you prepare all the necessary documentation, improving your chances of approval.


You should seek expert advice to minimise your risk.

Pre-approval can be incredibly useful, however, it’s not foolproof. There’s always a chance that you’ll get pre-approval and be denied formal approval, or that you won’t be approved in the first place. For example, you may be denied if you can’t properly document your income, your credit rating is low or if you’ve applied for loans too often in the past.

Furthermore, you may be granted pre-approval and denied a loan. This may occur if your situation changes following the pre-approval process. To ensure this doesn’t happen avoid changing jobs, making large purchases, applying for credit or overspending until your loan application is formally accepted.

You could also be denied at this stage if the lender’s policy changes after pre-approval, or if interest rates increase. Unfortunately there is very little you can do to avoid these two, so you should seek expert advice to minimise any risks involved.


The process of securing a home loan can be challenging. You may not be able to find a suitable loan through your bank, the application might be confusing and you may be denied without fully understanding why.

That’s why getting the right help from a mortgage broker is absolutely essential at this stage. Brokers have an inside knowledge of lenders and how the approval process works. They also have access to countless loan products so that no matter your situation they can find a loan that fits your needs.

But most importantly a mortgage broker is your advocate throughout the entire process. They’ll use their experience and expert knowledge to help you fill out documentation, prepare your application and get your affairs in order. With the right person in your corner the home loan application process could be an easy breeze.Geth the right help and talk to a local mortgage broker to find out more.

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