What is a Pre-Approval and Why Do I Need It?
- namchau
- May 26
- 2 min read
If you're thinking about buying your first home or next investment property, you've probably heard the term pre-approval or conditional approval. But what does it actually mean—and why is it so important?
A pre-approval is when a lender agrees, in principle, to provide you with finance based on your current financial position and the documentation you provide. While it’s not a formal approval just yet, it’s a vital step in the home buying journey. Here's why:
1. You're Finance-Ready
Getting a pre-approval means the bank has conducted preliminary checks on your income, deposit, liabilities, and credit score. It tells you how much you can borrow and gives you a
clear price range to work within.
2. You Have a Conditional Offer
Conditional approval means the bank is willing to lend you money—based on your current financial details—under the assumption that:
Your financial situation doesn’t change
You purchase within the approved limit
The property meets the bank’s lending criteria and risk profile
This puts you in a strong position when it comes time to make an offer or bid at auction.
3. It's Valid for 90 Days
A fully assessed pre-approval typically lasts for 90 days. If you find a property during this time that ticks your boxes and aligns with your approval, the bank may only need to order a valuation before issuing formal approval.
4. You're Auction-Ready
Auctions are unconditional—there's no cooling-off period. But with a pre-approval in hand, you can confidently bid knowing a lender is likely to support your purchase, provided the property value and your financial situation align with the original approval.
5. Peace of Mind
Ultimately, pre-approval gives you the confidence to shop with clarity. You’ll avoid wasting time on properties outside your borrowing capacity and be ready to move quickly when the right opportunity arises.
Need help getting pre-approved?
At Ascot Mortgage, we can guide you through the entire process—from assessing your financial situation to finding the right lender for your needs. Book a free consultation today and get a head start on your home buying journey.
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