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Home loan pre-approval: a guide

Image of couple getting home loan pre approval

A home loan pre-approval, sometimes called a conditional approval, can be helpful if you’re looking to buy a home or investment property as it gives you an idea of how much you can borrow. 

A pre-approval is an important step in a process that may eventually lead to the successful negotiation, offer and purchase of your home. While the pre-approval process is usually relatively simple, there are a few things you should know before you apply. 

What is pre-approval (or conditional approval)?

Pre-approval is when a lender indicates in writing how much you can borrow, subject to certain conditions being met. It’s not guaranteed they will lend you this exact amount, but it can give you a better idea of your budget.

You don’t need to have a pre-approval to start looking at properties, but it helps. As well as giving you a better idea of what you can afford, a pre-approval shows vendors and real estate agents that you are a serious buyer who’s done their homework and started the home loan application process. With a pre-approval, you can bid at auction with confidence and negotiate with some degree of certainty. 

A pre-approval is valid for a certain period of time (at Bluestone it’s two months from the time of approval). After this time period is over, you’ll need to apply again. Once you find a property and make a successful offer, you’ll need to undergo a few more verification checks before your lender can give you unconditional approval. 

When should you apply for pre-approval?

Because a pre-approval is only valid for a limited amount of time, it’s a good idea to wait until you are ready to start seriously shopping around for a new home. If you apply too early, your pre-approval could expire before you find a property, and you’ll need to reapply. 

Making multiple applications is not only time consuming, but it could also potentially affect your credit rating as your application for pre -approval shows on your credit file as an enquiry. Too many credit enquiries is one of the factors that affects your credit score and this could impact your ability to get a loan in the future.

How to get a home loan pre-approval 

Here’s what you need to do to apply for a pre-approval with Bluestone.

  1. Go to find your fit and see if a Bluestone home loan is right for you. 
  2. Complete the questions, provide your contact details and one of our loan specialists will get in touch to discuss your specific needs. 
  3. We’ll send you an application form to complete along with a list of required supporting documents. 
  4. Return your completed application form and supporting documents by email. 
  5. Our credit team will assess your application and get back to you with a decision. 

How long does a home loan pre-approval take?

Once we have your completed application and supporting documents, our credit team can assess your pre -approval application and get back to you within two business days. 

Go to find your fit now to get started!

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