Buying a new home is a pretty big deal.

As you move through research stages, from looking at properties to making an offer, you’ll encounter a few steps you need to take to become a first-time homeowner.

Home loan pre-approval is one such step. Though it’s not a requirement, it’ll help you know approximately how much you have to spend. So, you can hunt for a home with confidence.

What is home loan pre-approval?

Home loan pre-approval happens when your lender agrees, in principle, to lend you money for the purchase of a new home. It doesn’t mean you’ve received final approval for a home loan. However, it may mean you’re able to make an offer with a little more certainty.

At Suncorp Bank, we call this step ‘pre-approval’, but different financial institutions and lenders might not use this term. It may also be referred to as:

• conditional approval, or
• approval-in-principle.

3 things you should know about pre-approval

Pre-approval offers expire

Home loan pre-approval is subject to certain conditions being met. These include your personal financial situation — such as your employment status, whether you’re starting a family or if you’ve taken on a new loan — as well as the property market. Over time, these factors are likely to change, which is why an offer will expire after three months (although depending on your circumstances, Suncorp Bank may decide to extend your offer for a further three months).

In addition to these conditions, pre-approval depends on the property itself being acceptable to your lender.

Applying for pre-approval may affect your credit rating

Though applying for a single pre-approval is unlikely to affect your credit rating, applying for several in a short period might harm your ability to borrow. Pre-approvals are visible on your credit file as a loan enquiry, so multiple applications can create the impression that you’re financially unstable.

To avoid this, you may find it useful to wait to apply for pre-approval until you’re nearly ready to make an offer. If you’re not quite ready to apply, try Suncorp Bank’s Borrowing Limit Home Loan Calculator to estimate how much you could borrow.

It could give you a home-buying edge

Obtaining pre-approval means you’ll be able to more confidently put in an offer on a property, or bid on it at auction, and move on to full approval potentially ahead of other buyers. You may even find that sellers prioritise your offer because your finances have already been validated.

Get expert assistance 

If you have questions about applying for pre-approval or you'd like to discuss your options, book an appointment with a Suncorp Bank home loan expert. All consultations are 100% obligation-free.

Talk to a home lending expert

Published 12 October 2020