Property due diligence
Finance, valuation and insurance checks
Why pre-approval, a lender valuation and an insurance quote are three separate checks a buyer still needs to run before committing.
- Loan pre-approval, a lender's property valuation and final loan approval are three separate steps — confirm each one, don't assume any implies the others.
- A lender valuation can come in below the contract price, requiring extra buyer equity.
- Get an actual insurance quote for the specific property before committing — flood, bushfire or defect exposure can materially change the cost or availability of cover.
- Cover should reflect full rebuild cost, reviewed at least every 12 months, not a one-off estimate locked in at purchase.
Pre-approval, valuation and final approval are three different things
Loan pre-approval indicates a lender may be willing to lend up to a certain amount, based on the information provided at the time. It is not the same as a lender valuing this specific property, and it's not the same as final, unconditional loan approval. A property that's legally and physically fine can still fail to settle if the lender's valuation comes in below the contract price, or if the property itself doesn't meet the lender's policy (some lenders restrict lending on certain high-density apartments, for example). Confirm all three separately, in this order, with your lender or broker — don't assume one implies the others.
Get an actual insurance quote, not an estimate
Home building insurance covers the cost of repairing or replacing the house itself, its fixtures and other structures on the property — not household items or personal belongings, which need separate contents cover (Moneysmart (ASIC), verified 31 Jul 2026). If the property is in a strata or owners-corporation title, the body corporate may already insure the building, meaning the buyer may not need their own building insurance — but still needs contents cover, and should confirm the exact split of responsibility rather than assume it (Moneysmart (ASIC), verified 31 Jul 2026). Get a real quote before committing: a property with flood, bushfire or building-defect exposure can be materially more expensive, or harder, to insure than a generic online estimate would suggest.
Avoiding underinsurance
Cover should reflect the full cost of rebuilding — including landscaping, rubbish removal and solar panels — and should be reviewed at least every 12 months as rebuilding costs change (Moneysmart (ASIC), verified 31 Jul 2026). An insurance quote obtained during due diligence is a starting point, not a figure to lock in and forget once you own the property.
Ownership costs beyond the mortgage
Before committing, estimate the full ownership picture, not just the loan repayment: council rates, water charges, any owners-corporation fees and special levies, immediate repair costs flagged by your inspection, and an emergency buffer. A property that's affordable on the contract price alone can still strain a budget once these are added.
Worked example
A buyer with loan pre-approval for $750,000 agrees to pay $720,000 for a property. Before removing their finance condition, they request the lender's valuation (which comes in at $700,000, requiring extra equity to cover the gap), get a real insurance quote (higher than expected due to a mapped flood overlay), and get a $15,000 repair estimate from their building inspection. None of these individually block the purchase, but together they change what "affordable" actually means for this specific property.
Practical checklist
Before you remove finance conditions or bid
- Confirm pre-approval is current and based on accurate, up-to-date information
- Ask your lender or broker whether this specific property meets their lending policy
- Get an actual insurance quote for the property, not a generic estimate
- Confirm whether an owners corporation already insures the building, and what it doesn't cover
- Add council rates, water charges, OC fees, special levies and repair costs to your budget
Questions for a professional
- Does this specific property meet your lending policy, including any high-density or title restrictions?
- What would happen if the lender's valuation comes in below the contract price?
Official resources
Sources and methodology
- Choosing home insurance — Moneysmart (ASIC) (retrieved 31 Jul 2026)
Figures on this page are drawn from Delora's local knowledge graph, refreshed from these primary sources and checked for changes on a regular schedule. If a figure here looks out of date, the official source above is always the authority — please let us know.