Preparing financially
Home-loan pre-approval: what it does and does not mean
Conditional approval, credit checks, expiry, and why pre-approval is not a guarantee of settlement — plus how to prepare your documents and work with a broker.
- Pre-approval is conditional, not a guarantee — formal approval still requires a fresh credit check and a lender valuation of the specific property.
- Pre-approvals expire, commonly after a few months.
- Auctions create a binding, unconditional contract immediately — never rely on pre-approval alone without confirming its currency and completing your own due diligence first.
- Decide between going direct to a lender or working with a mortgage broker, and check your credit report, before you apply.
What pre-approval is — and isn't
Pre-approval (sometimes called "conditional approval") is a lender's indication that they're likely to lend you a certain amount, based on the information and documents you've provided so far. It is not a guarantee of final approval or settlement. Before a loan is fully approved, the lender will still typically conduct a fresh credit check, value the specific property you've chosen, and confirm nothing material has changed in your income, employment or debts since pre-approval was issued. Pre-approvals also expire — commonly after a few months — and rate offers can change in that window.
The pre-approval to settlement timeline
Initial enquiry → document submission → conditional pre-approval → property selected → lender valuation and property checks → formal (unconditional) approval → loan documents signed → settlement. Each arrow is a point where something can change the outcome — most commonly, a lender's valuation coming in below the contract price, or a change in the buyer's financial position between pre-approval and formal approval.
Preparing your documents
Typical document categories: identity, income (payslips, tax returns for self-employed applicants), employment confirmation, savings and asset statements, details of existing debts (credit cards, personal loans, buy-now-pay-later), living-expense information, evidence of deposit source (including a gift letter if relevant), and any government-programme documentation. Self-employed applicants and those with variable income typically need more extensive documentation — ask your lender or broker early what they'll require.
Before you apply
Two things are worth doing before you submit a pre-approval application: deciding whether you'll go direct to a lender or work with a mortgage broker (who has a legal best interests duty, but usually works from a lender panel rather than the whole market), and checking your own credit report for errors, since you're entitled to a free copy every 3 months and correcting mistakes before a lender sees them can avoid delays.
Practical checklist
Pre-approval document checklist
- Identity documents
- Recent payslips or tax returns (self-employed)
- Employment confirmation
- Savings and asset statements
- Details of existing debts, credit cards and buy-now-pay-later accounts
- Evidence of deposit source, including a gift letter if applicable
- Any government-programme eligibility documents
Relevant Delora tool
Questions for a professional
- What happens to my rate after any fixed or introductory period ends?
- What assumptions did you use for my living expenses?
- What could change between pre-approval and formal approval in my situation?