Mortgages and Financing

Pre-approvals are indications from the lenders that they are willing to approve the loan when the borrower lodges a full application for the same.

The lender does a basic assessment on the income of the borrower and then informs the borrower that they can borrow up to a certain amount of money from the lender. This process is completely based upon the information that the borrower provides to the lender.

The pre-approval amount is determined on the information that the borrower has provided to the lender and an assessment is also carried out with regard to the ability of the borrower to repay back the loan. Pre-approvals are usually valid up to 3 – 6 months.

Generally pre-approvals have various terms and conditions which the borrower has to fulfil before the loan gets finally approved. The borrower needs to meet certain terms and conditions in order to get the loan sanctioned from the lender and these are:

  • all information provided for assessment should be true and correct;
  • all necessary documents verifying the borrower’s deposit, security, assets liabilities and income must be provided;
  • proper verification of borrower’s personal and financial details should be conducted;
  • valuation of any cross collateral security provided by the borrower for the loan should also be assessed; and
  • the borrower’s agreement with the Lenders Mortgage Insurance when the loan amount is more than 80% of the property value or in case the loan is a Low Doc Loan then the amount is 60% of the property value.

How to Get Pre-Approvals?

To get pre-approvals from the lenders, you first need to provide your mortgage broker with some key documents which includes:

  • completed and signed pre-approval application form;
  • copy of your payslips and/or tax returns;
  • copy of your bank account statements reflecting any deposits;
  • details of your existing current debts such as credit cards, personal loans and home loans; and
  • proof of identity.

The lenders after receiving all the required documents from your mortgage broker will do an initial assessment of your borrowing and repayment capacities.

You get a notification from the lenders once your applications for pre-approvals are approved.

Many lenders now have an option for borrowers to apply for pre-approvals through online tool. This assessment process usually takes around 30 minutes.

Why You Need Pre-Approvals?

You may have multiple reasons for applying for pre-approvals, some of those include:

  • pre-approvals give you confidence of buying properties and provide you an estimate in relation to how much you can borrow;
  • if you have your pre-approvals ready, you are in fact a step ahead than the other property buyers and you actually take less time in finalising the property you want to buy;
  • pre-approvals help you to negotiate a better price with the property seller especially if the seller has stringent conditions on the sale of the property; and
  • if you have your pre-approvals ready, you also have an option of buying a property at auctions.

For additional information or assistance in any related matter, contact our team of experts at OH Mortgage

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