Home loan pre-approvals explained: the what, why, when and how

an image of a couple getting home loan pre-approval


Getting pre-approval is an important part of your home-buying journey. It gives you an indication of how much you can borrow, so you can start your house hunt. Plus, it helps you bid with confidence when the right property comes along.

This short guide takes the mystery out of pre-approvals, giving you the facts and tools to help you make the right decisions.

What is a home loan pre-approval?
Lenders use a variety of terms to describe home loan pre-approvals. Pre-approval, indicative approval and approval in principle all mean roughly the same thing - that your lender has agreed in principle to lend you a certain amount of money toward the purchase of a property. To do this, they assess your financial situation and determine how much you can afford to borrow – and this can happen before you’ve chosen your dream home.

It’s important to remember that pre-approval is not a guarantee of funds. It’s an indication that, should your personal circumstances remain the same, you are likely to have a loan of this amount approved. So you can start looking for a home with a clearer sense of what is and isn’t within your price range.

Once you’ve found your ideal home, your lender will need to carry out a property valuation and reassess your personal finances (including most recent payslips and bank statements) so they can grant conditional approval – the final step towards securing your home loan.

Did you know? Getting home loan pre-approval can be as quick as 48 hours if you provide all the required documentation upfront.

Why do people apply for pre-approvals?
People often seek home loan pre-approval so they know roughly what they will be able to borrow. When you arrive at an auction, it’s really useful to know what your upper limit is. And even before that, having pre-approval can help you save time, by narrowing your initial property search. It can also save potential heartbreak, as you’ll avoid inspecting properties outside your price range.

Sellers and real estate agents also look at pre-approvals favourably. It shows you are a serious buyer, and less likely to withdraw an offer due to a lack of finance – which will potentially give you an edge if you want to negotiate an offer. Just check the terms and conditions of your pre-approval with your lender, before you start bidding or haggling.

Don’t forget: you can always use our Borrowing Power Calculator to get an initial estimate of how much you can borrow without going through a credit assessment.

When is the right time to apply?
Most people apply for home loan pre-approval when they are ready to start looking seriously at buying a property. But before you apply, it’s wise to keep a few things in mind:

  • Applying for multiple pre-approvals from different lenders in a short time frame can reflect poorly on your credit score – so choose your preferred lender first.
  • Pre-approvals generally expire after three or six months, though most lenders are willing to extend if your situation remains the same and you haven’t found the right property.
  • Your lender will need to reassess your application if your personal or financial circumstances change – for example, if you change jobs, have a baby, or take out a personal loan.

Did you know? Although the end-to-end Pepper Money home loan application process can take up to six weeks, getting home loan pre-approval can be as quick as 48 hours (or two working days) if you provide all the required documentation upfront. This includes recent bank statements, payslips or other proof of income, personal identification and a summary of your assets and liabilities (such as savings and other loans).

How do I get started?
To get a home loan pre-approval with Pepper Money, simply speak with one of our Lending Specialists on 13 73 77 or request a call back by filling in our online form. They will guide you through the process, explain your options, and answer any questions. Alternatively, speak with your Pepper broker.

It’s useful to have the following information on hand when you do chat with us:

  • what the price range is of the property(s) you’re looking at
  • how much deposit you have
  • details of your income and living expenses.


Not quite ready to apply? Get an estimate of your borrowing capacity here. Or you may like to read this step-by-step guide to how the typical Pepper Money application process works.


Book an appointment with a Lending Specialist today

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