This is one I get asked constantly: should you get pre-approval before you start looking at properties, or is that jumping the gun? Honest answer? It’s rarely jumping the gun. If anything, it’s the opposite problem. Most people wait too long. So let me explain what pre-approval actually is, how it’s different from formal approval, and what’s changed over the last year.
What Is Home Loan Pre-Approval?
Pre-approval (some people call it conditional approval) is basically a lender putting it in writing that they’re likely to lend you a specific amount, subject to a valuation and a few final checks. It’s not a guarantee of funding, and I want to be upfront about that. What it is, though, is a real signal. Your finances have actually been looked at, not just estimated, and you’re genuinely in a position to go and make offers within that number.
For a lot of the Geelong buyers I sit down with, this is the moment it starts to feel real. Up until then you’ve been working off guesses. Pre-approval is the first time an actual lender has looked at your documents and put a real number against your name.
Pre-Approval vs Formal (Unconditional) Approval
These two get mixed up constantly, so let’s be clear on the difference before you start house-hunting, because it matters.
Pre-approval (conditional)
This is based on your income, your expenses and your deposit, and it’s not tied to a specific property yet. It’s what gives you the confidence to walk into an open home and actually make an offer, instead of standing there wondering if your finance is even real. I’ll come back to how long it lasts a bit further down, because it varies more than you’d think.
Formal approval (unconditional)
This one happens after you’ve made an offer and signed a contract on an actual property. The lender then reviews the valuation and finalises whatever conditions are left. It’s the last big step before settlement, and it’s a different, more detailed process to the pre-approval you got earlier. People often assume it’s the same thing. It’s not.
What’s Changed in the Last Year
A few of things are worth knowing before you even start, because they shape what a lender’s going to offer you.
APRA (the regulator that overseas the banks) has kept the mortgage serviceability buffer at 3%. That means every bank still checks you could handle repayments 3 percentage points above whatever rate you’re offered. It’s not new, but plenty of buyers assume it’s softened as rates have moved. It hasn’t.
What is new is APRA’s debt-to-income cap, which started on 1 February 2026. Banks can now only write 20% of their new home loans to borrowers whose total debt is six or more times their gross household income (worked out separately for owner-occupier and investor loans). It doesn’t apply to non-bank lenders. If you’re carrying a fair bit of existing debt, tell me early. It shapes which lender I put your pre-approval through.
This one matters most if you’re planning to keep your current home and buy your next one. Keeping
the first loan and adding a second can push your total debt past that six times mark quicker than
you’d expect, so it’s worth knowing where you sit before you start looking.
And if you’re a first home buyer, the Home Guarantee Scheme changed properly from 1 October 2025. Income caps were removed entirely, the old regional scheme was folded into one First Home Guarantee, and the price cap for Geelong was lifted to $950,000. If you looked at this scheme a while ago and figured you were out, it’s worth another look. The rules aren’t the same rules anymore.
Why Get Pre-Approval Before You Start Looking?
There are a few genuinely practical reasons here, beyond just feeling more prepared (though that matters too).
You know your real budget, not an estimate. Making offers on properties outside what you can actually afford wastes everyone’s time, and it can get messy if you get caught up in the moment at an auction. Agents in the busier growth areas around Geelong and the Surf Coast, like Mount Duneed, Armstrong Creek and Torquay, also tend to take pre-approved buyers more seriously. And if the right property comes up, having pre-approval sorted means you can move on it fast, which matters when the good ones don’t sit around.
There’s a psychological side too, and I don’t think it gets talked about enough. House-hunting without pre-approval means every open home comes with that nagging “but can we actually afford this?” in the back of your mind. Buyers who’ve already been assessed look at properties differently. The finance question’s answered, so they can focus on the property instead of second-guessing their own numbers.
Documents You Need for Home Loan Pre-Approval
What you need really depends on your employment type. It’s not one-size-fits-all.
PAYG employees
Generally I’m asking for your most recent payslip (showing at least two pay cycles), your latest bank statements showing your salary coming in, proof of your deposit, photo ID, and details of any existing debts or credit cards you’re carrying. Some lenders ask for a bit more, so I’ll confirm exactly what yours needs.
Self-employed applicants
This one’s a heavier list. The good news is that some lenders will work with a single year of financials rather than two. Even so, expect to provide your most recent personal and business tax returns, your ATO Notice of Assessment, and either your BAS or business bank statements covering the last 12 months. If your income runs through a trust or company, get your accountant involved early. Lenders look at self-employed applications more closely, and that’s just the reality of it.
Start earlier than you think, particularly if your last tax return doesn’t fully reflect how your business is performing right now.
A note on gifted deposits
If part of your deposit is coming from family, most lenders want a signed gift letter confirming it’s a genuine gift, not a loan that needs to be paid back. It’s a small piece of paperwork, but it catches people out if they haven’t sorted it in advance.
How Long Is Pre-Approval Valid For?
This one is worth paying attention to, because the answer isn’t the same everywhere. The major banks (Commonwealth Bank, Westpac, NAB and ANZ) generally issue pre-approval valid for around 90 days. Some other lenders offer longer, and most cases a pre-approval can be extended if you haven’t found anything yet.
Which lender I put your pre-approval through can genuinely change how much breathing room you’ve got while you search, not just the rate you end up with. If you know you’ll be house-hunting for a while, tell me that upfront. It changes who I’d recommend.
How Long Does Pre-Approval Take?
Once your documents are in, pre-approval typically takes around three to five business days with most lenders. Nobody can give you a hard number though. It depends on how busy that lender is and how straightforward your application is. Some lenders fast-track simple cases, so if you’re working to a tight timeline (an auction coming up, say), tell me upfront so I can prioritise a lender that moves quickly.
Complex income, like a mix of PAYG and business income, can take a bit longer, simply because there’s more for the lender to check.
Does Pre-Approval Affect Your Credit Score?
Yes, generally it does. A formal pre-approval application involves a credit enquiry, and that gets recorded on your credit file. Multiple enquiries in a short window, like applying to a few lenders at once, can affect your score more than most people realise. This is exactly why I work out the right lender before we apply anywhere, rather than applying broadly and hoping one comes back with a yes. One well-targeted application beats three scattered ones, every time.
What If My Pre-Approval Expires Before I Find a Property?
This happens more often than you’d think, especially if you’re being a bit selective or the right place just hasn’t turned up yet. If it lapses, most lenders will renew it, though they’ll usually want a fresh look at your bank statements and payslips first. It’s a much smaller process than starting from scratch. I keep track of that expiry too, but it’s worth you keeping an eye on it so it doesn’t catch you out mid house-hunt.
Frequently Asked Questions
How long is home loan pre-approval valid for?
It depends on the lender. The major banks generally sit around 90 days, some lenders offer longer and most can be extended if you need more time. I’ll match you to whichever suits how long you expect to be searching.
Can I still get pre-approval if I’m self-employed?
Yes. Depending on the lender, you might only need one year of financials now instead of two, though the assessment can still take a little longer than a standard PAYG application. It’s very achievable with the right lender.
Does applying for pre-approval guarantee I’ll get the loan?
No, and I’ll always be upfront about that. It’s conditional, still subject to a valuation and final checks once you’ve signed a contract. It’s a strong indicator, not a guarantee.
How I Handle Pre-Approval for Geelong Buyers
It’s a pretty straightforward process from your end. Book a free call and I’ll confirm exactly which documents you need. You gather them, and I submit your application to whichever lender suits your circumstances, factoring in how long you’ll probably need the pre-approval to stay valid. It usually comes back within days. From there you’re house-hunting with a real number in hand, not a guess.
What makes this different to walking into a bank is the step before I submit anything. Instead of sending your documents to whichever lender you happen to already bank with, I compare your situation across my panel of around 60 lenders first, and work out which one gives you the strongest result and the validity window that suits your timeline. That one decision is often the difference between a smooth pre-approval in under a week and a frustrating three-week back-and-forth.
If your situation’s a bit more complicated (self-employed income, a recent job change, a gifted deposit), have that conversation with me before you start gathering paperwork. I’ll tell you upfront exactly what a lender wants to see.
A Few More Things Your Broker Wants You to Know
The home loan process can feel complicated, but understanding what lenders look for can put you in a much stronger position. Explore Paddy’s short videos for practical insights into pre-approvals, loan applications and preparing for your next property move.
