Applying for pre-approval on your home loan is important for three major reasons:

  1. It gives you a great indication of how much you’re able to borrow
  2. It lets you know if there are any potential problems that can be sorted out before you actually need the money.
  3. It lets the vendor know that you’re a serious buyer.

1. Borrowing power

Knowing how much lenders are willing to lend you is crucial to your search for property. Lenders have a formula of how much risk they’re willing to take based on how much you earn, how much you owe, what you own, your savings and credit history. Based on that formula, they will give you conditional pre-approval to lend you a certain amount of money. Once you know what that amount is, you can start your property search based on that budget. If that budget isn’t going to buy you what you want, where you want, then you’ve got 2 choices: a. find a way to borrow more money by increasing your income and decreasing your debt or b. change your property buying strategy and thing about maybe buying a cheaper investment property instead.

It’s important to note that the pre-approval is conditional. It’s not a guarantee. But, based on the information that has been provided to the lender and if all things remain the same in the economy, it’s a good indication.

2. Potential problems

They say that knowledge is power and that’s definitely the case here. If you make an offer on a property and it’s accepted and then you start applying for finance and find that there’s a problem with your credit history or some reason that the bank won’t lend you the money, then you’re going to potentially lose the house. The process of pre-approval will sort out all those issues early – so that you’ve got time to get things in order before you start negotiating on a property.

3. Serious buyer

If there are a couple of you negotiating over the same property, or if you go in pre-auction with a serious offer, once the real estate agent knows that you have pre-approval for finance, your offer will potentially hold more weight than someone without pre-approval. The agent and the vendor will have more confidence that your offer won’t be derailed because you can’t secure financing.


If you’re ready to buy a property, please get in touch to secure pre-approval. It’s the first step you need to take, and we can take you through the process step by step.

We’d love to take care of your finance while you find that property.