Pre-approval first asks: is this broadly workable?
A lender generally reviews identity, income, expenses, deposit sources, existing debt and credit history, then issues an initial decision with conditions and an expiry date. It can narrow a search range and expose missing information early.
The approved amount is not necessarily a sensible amount to spend. Leave room for legal, valuation, inspection, insurance, moving and maintenance costs, as well as possible rate changes.
Why it is not final approval
- The lender still needs to assess the specific property, title, valuation and insurance.
- Conditions may limit property type, area, maximum lending, deposit or other features.
- A change in employment, income, spending, debt or credit history can affect the outcome.
- Expired approval normally requires updated financial information and reassessment.
Before an offer or auction
An auction purchase is generally unconditional. Before bidding, ask the adviser and lender to confirm finance matters and have a lawyer review the agreement and title. For a negotiated purchase, do not remove a finance condition based only on an old pre-approval.
Rely on finance only after the lender has assessed your current position and the specific property and confirmed every condition in writing.