What is a Home Loan Pre-Approval?

July 03, 2014
Chris Smith

A pre-approval although not always the same across each lender is a preliminary approval of a proposed loan from the lender to the applicant.


Some pre-approvals are credit assessed by the lender meaning a credit assessor reviews your details such as:


  • income
  • employment
  • savings
  • assets
  • liabilities
  • credit score
  • the proposed loan amount and loan to value ratio
  • whether the income services the proposed debt and
  • whether the proposed application suits the overall policies and parameters for that lender.


The assessed pre-approval will usually be subject to valuation and suitable property being located and is also subject to any changes in the applicants personal circumstances.


Not all pre-approvals are fully credit assessed and may only be system assessed, meaning they take only into account the information electronically entered - they would only be fully assessed when a  property is purchased and a formal application can take place. These pre-approvals carry less value when being prepared for auction as the supporting information has not been assessed and verified by a credit assessor (even though all pre-approvals are subject to re-review).


If going to auction or purchasing without a finance clause, it is recommend to do a pre-approval which is credit assessed and not just system assessed. Although this does not eliminate all chances of a formal loan being declined, it reduces the chances and highlights issues that might be encountered for an individuals loan application.


If you have any further questions about mortgage pre-approvals please give us a call at the office on 03 9585 7779 or contact us via home loan pre-approvals.



Posted in: Home loans

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