Pre-approval: what it means and what it does not

Know how the assessment was completed

Some early indications rely on limited information, while a fuller pre-approval may involve documents and a credit assessment. Ask what has been verified and what conditions remain.

The property is usually still untested

A lender can decline a particular security because of valuation, location, size, title, condition or property type. Pre-approval does not mean every property within the price range will be acceptable.

Time and changes can affect the result

Pre-approvals have an expiry period set by the lender. New debts, higher credit limits, a job change, reduced savings or changed expenses may require the application to be reassessed.

• Check the expiry date before relying on it
• Keep financial documents current
• Disclose material changes promptly
• Avoid new credit applications without considering the effect

Your offer conditions still matter

A finance clause can provide time for formal approval in a private sale, but wording and deadlines require legal advice. Auction purchases are commonly unconditional and need particular care.

Formal approval needs a complete transaction

The lender generally needs the signed contract, acceptable valuation, current evidence and satisfaction of all conditions. Allow enough time for these steps before the contract finance date.