How to Get Pre‑Approved for a Home Loan

Buying a home is a major financial milestone. Whether you’re entering the property market for the first time, purchasing an investment property, or planning your next home in retirement, understanding how home loan pre‑approval works can help you make decisions with clarity and confidence.

At MBA Financial Strategists, we help clients make informed choices that support their long‑term goals. Knowing what pre‑approval involves and how it fits within your overall financial plan is an important step in your property journey.

 

 

What Is Home Loan Pre‑Approval?

Home loan pre‑approval, sometimes called conditional approval or approval in principle, is a lender’s early indication that, based on your current financial position, you may be eligible to borrow a set amount for a property purchase.

While pre‑approval is not a final commitment, it offers a clear price guide and signals to real estate agents and sellers that you are a genuine buyer. Pre‑approval usually remains valid for 60 to 90 days, depending on the lender and your individual circumstances.

 

Why Pre‑Approval Is Important

Pre‑approval provides several practical advantages:

• Confidence in your budget: You can search for properties within a realistic price range.
• A stronger position with sellers: Vendors often view pre‑approved buyers as more prepared and reliable.
• A smoother pathway to settlement: Much of the documentation and assessment is completed early, which can make the final approval more straightforward once you’ve found the right property.

For further reading on borrowing confidence and lender assessment criteria, the Australian Securities and Investments Commission (ASIC) offers a useful overview of the home loan process.

 

Step 1: Review Your Finances

Before applying for a home loan, it’s important to review your financial position and take steps that can strengthen your pre‑approval application. Start by checking your credit report and score, correcting any inaccuracies, and understanding how your credit habits affect your borrowing power. Managing other debts, such as credit cards or personal loans, can improve your debt‑to‑income ratio. Building your deposit and savings history is also key – lenders typically look for a deposit of 5-20% of the property value, and demonstrating consistent, genuine savings can enhance your application. Maintaining stable income and employment provides additional reassurance to lenders, so it’s best to avoid large employment changes or new credit commitments while applying.

Working with a financial adviser can help ensure these steps align with your broader financial goals, including cash flow management, investment planning, and superannuation strategy.

 

Step 2: Prepare Your Documentation

Having accurate and complete information ready can make the process more efficient. Lenders generally request:

• Proof of identity (driver’s licence or passport)
• Proof of income (recent payslips, PAYG summaries, or business financials for the self‑employed)
• Details of expenses, existing loans, and credit limits
• Evidence of savings and assets (bank or investment statements)

Your financial adviser or mortgage broker can guide you through this step to ensure all information is current and presented clearly.

 

Step 3: Compare Lenders and Loan Options

Loan products can vary widely in interest rates, features, and service levels, so it’s important to consider several key factors when comparing lenders. Flexibility is one aspect to review, including options such as offset accounts, redraw facilities, or the ability to make extra repayments. The type of interest rate – whether fixed, variable, or a split-rate loan – should align with your cash flow preferences and financial goals. Costs and conditions, including application fees, ongoing charges, or potential break costs, can also impact the overall affordability of the loan. Finally, consider the level of support and service provided, from responsiveness to digital tools and overall client experience.

A financial adviser can help you assess how different loan types fit within your broader wealth and lifestyle objectives, particularly if you’re planning for a family, investment strategy, or retirement outcomes.

 

Step 4: Submit Your Pre‑Approval Application

Once you’ve chosen a lender, complete the home loan pre‑approval application. The lender will review your financial information and conduct a credit check. If approved, you’ll receive a pre‑approval letter outlining your indicative borrowing limit and any conditions that apply.

Keep in mind that pre‑approval is not unconditional approval. The lender must still confirm the property’s valuation and ensure your financial situation hasn’t changed before issuing final loan approval.

 

Step 5: Search with Purpose and Confidence

With pre‑approval in place, you can focus on properties that align with your budget and long‑term goals. You’ll be ready to move forward promptly when you find a property that suits you.

 

Step 6: From Pre‑Approval to Settlement

When your property offer is accepted, your mortgage broker will help you move from pre‑approval to unconditional approval. The lender will complete a property valuation and finalise your loan documentation.

Modern digital verification tools have made much of this process faster and more transparent, supporting a clearer pathway from planning to ownership. Reliable platforms such as Property Exchange Australia (PEXA) have helped simplify settlement processes across most lenders.

 

Support Through Your Home‑Buying Journey

The home loan process can feel complex, but with professional guidance it becomes simpler and more manageable. MBA Financial Strategists assists clients across South Australia with understanding borrowing capacity, comparing loan options, and aligning property decisions with broader financial strategies, from cash flow and investment planning to retirement preparation.

Whether you’re buying your first home, investing, or planning your next move, we’re here to help you make informed choices with confidence and clarity.

MBA Financial Strategists (ABN 13 008 285 756) is an authorised representative and credit representative of Akumin Financial Planning Pty Limited ABN 89 051 208 327, Australian Financial Services Licence and Australian Credit Licence No 232 706.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.