Pre-approval
A lender's conditional indication of how much it would lend you, subject to a property and final checks.
Pre-approval means a lender has reviewed your income, expenses and credit history and indicated a borrowing amount, conditional on valuing an acceptable property and confirming nothing has changed.
It is not a guarantee. Final approval still depends on the specific property, its valuation, and your circumstances remaining the same between pre-approval and settlement.
It usually lasts three to six months. Agents and vendors take pre-approved buyers more seriously, and at auction it is effectively essential since bids are unconditional.
Treat the pre-approved figure as a ceiling, not a target. Lenders assess what you can technically service, not what leaves you comfortable, and borrowing to the maximum removes the buffer that makes rate rises and life changes manageable.
Why it matters at auction
Auction contracts have no finance clause. Bidding without confidence in your funding means risking your deposit and potential legal action if you cannot settle.
The bit people get wrong
Some lenders issue system-generated pre-approvals with no human assessment. These carry far less weight than a fully assessed pre-approval and can be withdrawn at the valuation stage.
Common questions
Does pre-approval affect my credit score?
A full pre-approval usually involves a credit enquiry, which is recorded. Repeated applications across lenders leave multiple marks, so avoid applying broadly.
How long does it last?
Typically three to six months. It can often be extended with updated documents if you have not found a property.
Can pre-approval be withdrawn?
Yes, if your income, employment or spending changes, or if the property fails to meet lending criteria on valuation.