How mortgage pre-approval works and how to get ready for it

Walking into an auction or making an offer without pre-approval is a good way to lose a property you actually wanted, or worse, to have an offer accepted on something you can’t actually afford. Pre-approval (sometimes called conditional approval) gives you a lender-backed estimate of what you can borrow before you’re under time pressure to make a decision.

What pre-approval actually checks

A lender reviewing your pre-approval application looks at your income, existing debts, deposit, credit history, and living expenses, then compares that against their own lending policy and responsible lending obligations. It’s a genuine assessment, not a rubber stamp: two different lenders can come back with meaningfully different numbers for the same person, because their policies on things like overtime income, self-employment, or existing debt treat the same facts differently.

This is also why applying through a broker who works across several lenders can be more useful than approaching one bank directly. If your situation doesn’t suit one lender’s policy, a broker can usually tell you that before you apply, rather than after a declined application shows up on your credit file.

Full assessment vs a quick estimate

Pre-approval isn’t the same as the rough borrowing estimate you might get from an online calculator in the first minute of a conversation. A calculator gives a general range based on income and debts alone. Pre-approval involves the lender actually verifying your documents, checking your credit file, and applying their specific serviceability buffers, which is why the figure that comes back can be noticeably different from an early estimate. Treat any initial number as a starting point for the conversation, not the number to plan your offer around.

Getting ready before you apply

The single biggest cause of a slow pre-approval is missing or incomplete documentation. Before you start, gather:

• your last two to three payslips, or two years of tax returns if you’re self-employed;
• statements for any existing loans, credit cards, and buy-now-pay-later accounts;
• proof of your savings or deposit, including a history showing where the money came from;
• identification documents the lender requires (usually a driver’s licence and passport or Medicare card).

If your deposit is smaller than a lender would like, our guide to low deposit and guarantor home loans covers the paths available before you apply.

A typical pre-approval timeline

Stage	What happens	Typical timing
Initial application	You (or your broker) submit income, debt and deposit details	Same day, once documents are ready
Lender review	The lender checks documents against their policy	Roughly one to two weeks
Conditional approval issued	You get a borrowing figure, subject to conditions	End of the review period
Property found	Formal approval requires the actual property to be valued	Varies, once you’ve made an offer
Formal approval	Final sign-off once the property and contract are confirmed	Another one to three weeks after a property is under contract

What stalls an application

Missing documents are the most common cause of delays, but not the only one. Undeclared debts that show up on a credit check, inconsistent income (especially for self-employed applicants without clean records), and a deposit source the lender can’t easily verify (like a recent large cash deposit with no paper trail) all slow things down or trigger extra questions. Sorting these out before you apply, rather than mid-application, is the difference between a smooth two weeks and a frustrating month.

A broker who reviews your file properly before submitting can often catch these issues in advance, rather than the lender flagging them partway through and asking for more information, which resets the clock on the review and adds real delay you could otherwise have avoided.

Once you have pre-approval, it’s worth treating the figure as a ceiling to plan around, not a target to spend up to, since your actual repayments and living costs still need to work for you day to day. If you’re in the first home buyer stage of this process, our methodology explains how we score brokers on how well they prepare applications before submission, and our home page is the place to start comparing.