Pre-approval explained: what it is, what it isn't, and how long it lasts
Agents will ask whether you have it, and it changes how seriously your offer is taken. Here is what pre-approval actually gives you.
RentBuy Team
3 min read
Pre-approval, sometimes called conditional approval, is a lender's indication of how much it is willing to lend you, based on your income, expenses, savings and credit history, before you have found a property. It is the first step in buying with a mortgage, and it tells you and the agents you deal with that you are a genuine buyer with a known budget.
What it gives you
A clear ceiling. Rather than guessing what you can afford, you know the maximum loan your lender will consider, and you can search within it. It also speeds things up when you find a home: the lender has already assessed you, so the final approval usually comes down to valuing the property.
It gives you credibility. Agents ask about finance because they have seen sales fall over when a buyer's loan was refused. An offer from a pre-approved buyer is taken more seriously and, in a private sale, may be preferred over a higher offer from someone who has not been to a lender yet.
What it does not give you
Pre-approval is not a guarantee. The lender still has to value the property and confirm nothing has changed in your circumstances. If the valuation comes in below the price you agreed, the lender may lend less, and you will need to make up the difference. If you change jobs, take on new debt or the lender changes its policy, the approval can be withdrawn.
It is also usually tied to a property type. Some lenders will not lend, or will lend less, on very small apartments, properties in certain postcodes or homes in poor condition. Tell your lender or broker what you are looking at before you bid.
How long it lasts
Most pre-approvals are valid for three to six months. If you are still looking after that, you will need to renew, which usually means providing updated payslips and statements. Be aware that each application can leave a mark on your credit file, so avoid applying with several lenders at once.
Getting it
You can apply directly with a bank or through a mortgage broker, who will compare lenders for you. Either way, have your last few payslips, bank statements, ID and a summary of your debts and expenses ready. Be honest about spending: lenders check statements, and an application that does not match them is the quickest way to be declined.
Get pre-approval before you start going to inspections rather than after you have found the home. It takes days to a couple of weeks, and the home you love will not wait.
