What is pre-approval?
Pre-approval is a conditional confirmation from a lender that you meet their lending criteria and can borrow up to a specified amount, subject to verification of your final details at settlement.
A pre-approval is a lender's preliminary assessment confirming you can borrow a certain amount based on your income, assets, credit history, and liabilities. It is conditional, not a guarantee, because the loan still requires final verification of your details, a property valuation, and satisfactory searches before drawdown.
What pre-approval confirms:
- Your serviceability: the lender has checked your ability to repay at the assessed interest rate.
- Your borrowing capacity: the maximum loan amount you can access under the lender's current criteria.
- Your credit worthiness: your credit file and financial position meet the lender's standards at that point in time.
the team-approval typically remains valid for 90 days in the Sydney market. After that period, the lender may re-assess your circumstances if you haven't yet entered into a contract or if your financial position has changed significantly.
This sits between general eligibility and a formal loan offer. It gives you a concrete figure to work with when searching for property and signals to agents and sellers that you have backing. However, it is not a guarantee of funds, and a property purchase can still fall through if valuations, inspections, or final underwriting reveal issues. Mortgage brokers in Sydney typically arrange pre-approvals as a first step, helping clients understand their buying position before committing to an offer.