How to apply for pre-approval for your home loan

Pre-approval (or approval in principle) is an obligation-free way to estimate what you are able to borrow from a lender before you make an offer on a property.

Generally, getting pre-approval shouldn’t cost you anything.

It’s important to note that pre-approval is not a guarantee that you will be approved for a home loan. Pre-approval is subject to certain conditions^disclaimerone of which is the valuation of the property being satisfactory.

Why does your lender need to do a valuation? Good question.

As part of taking out a loan, a lender usually takes security for giving the loan, such as a mortgage over the property that the loan was used to buy. If a borrower then defaults on their loan, the lender has the right to recover the outstanding loan amount by selling the property. In other words, the property is security for the home loan. Getting a valuation provides assurance to the lender that the property is a suitable security.

Getting pre-approval could help you:

• Know how much you could borrow
• Plan your budget 
• Be confident to make an offer
• Be seen by real estate agents as a serious buyer

You can begin the application process before you start looking for a specific property or when you have found the home you want to buy. 

Generally, presuming that your circumstances don’t change, your pre-approval will last for around three months. This timeframe may differ from lender to lender. This means that getting pre-approval too early could mean that you have to repeat the process again. 

Before applying, you could also review our home loans and consider which home loan may suit your needs. 

The rules and processes for applying for pre-approval will depend on the particular lender.

When you apply for pre-approval with ANZ, we will complete a credit check. Be aware, this may impact your credit history.

We will also ask you for things like proof of your identity, expenses, employment and income. You'll also need to let us know the price range of the property you want and how much you have saved for a deposit. 

Please note, however, that pre-approval gives you an indication of how much you may be able to borrow from ANZ, not a guarantee that we'll lend you the funds. Once you've found the right property, please speak to us about progressing to making an application for full approval of your loan. 

Send us an enquiry to get started or apply online for pre-approval.

The rules and processes for applying for pre-approval will depend on the particular lender.

When you apply for pre-approval with ANZ, we will ask you to provide evidence of:

• your income, expenses, and employment
• your savings record
• the amount you have saved for a deposit
• any debts that you currently owe (e.g. credit card, personal loan)
• your identity

You'll also need to let us know the price range of the property you want.

Here’s a handy home loan document checklist to help you prepare for applying for pre-approval.

Generally, presuming that your circumstances don’t change, your pre-approval will last for around three months. This timeframe may differ from lender to lender.

During the time that your pre-approval letter is valid, you can look for properties with more confidence in knowing the lender is likely to lend you a certain amount of money – subject to you satisfying any conditions which apply to the pre-approval, such as the property being an acceptable security to the lender. 

If any of your circumstances change – such as your income, expenses, or type of employment – let the lender know as this may affect how much they may be willing to lend you.

If your pre-approval expires before you have signed a contract to buy a home and you want to keep a pre-approval in place, you will have to re-apply for another pre-approval. You should speak to your lender for more details about how to do this.

Pre-approval is a lender’s indication they may be willing to lend you a certain amount of money.  That pre-approval is usually subject to certain conditions being met. It can also be called conditional approval, or approval in principle.

Unconditional approval (also called full approval) indicates that a lender is willing to give you a home loan for a specific amount for a specific property. Of course, just because it is unconditional it doesn’t mean you have to accept the loan and borrow the money. 

Learn how you can get from pre-approval to full approval.

Even if you have pre-approval for a home loan, you may want to make your offer ‘subject to finance’. That way, if your lender declines your home loan application, then you may be able to withdraw your offer.  

Whether you choose to make an offer ‘subject to finance’ or not is up to you. You should seek advice from your solicitor or conveyancer before making an offer so that you are fully aware of your rights and responsibilities, including the risks of making an offer.

If you are buying at auction, 'subject to finance' conditions are generally not allowed, so you should seek advice from your conveyancer or solicitor before you start bidding.

Pre-approval  does not guarantee you will get a home loan. There are various things that may result in your home loan application being declined – even if you previously got pre-approval. For example:

• the lender may get the property valued and determine that the property value does meet the lender's LVR requirements
• the property may not be of an acceptable type to the lender (e.g. the apartment is smaller in size than what's accepted by the lender)
• there may be a change in your circumstances that impacts your financial position.

Always ask your lender about their lending criteria before you make an offer on a property.

Once you've found a property you want to buy and your offer has been accepted, you can start moving towards applying for full approval. The following things will need to happen:

• Contract of sale or offer and acceptance -
• No changes - we'll need to confirm if your financial situation has changed
• Valuation of the property - we may need to inspect the new property.  Don’t worry, we should be able to arrange this with the real estate agent in most cases.
• Insurance for the property - we need to make sure your new property is protected with building insurance before settlement. 

There are also things you might need to do, including:

• First home owner grant forms if applicable
• Principal place of residence form
• Stamp duty concession or exemption form
• Additional documents or information we may have requested as part of the application process
• Contact details for your lawyer, conveyancer or settlement agent to book settlement
• You might also consider obtaining a building or pest inspection for the property