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A pre-approval means that a lender will give you a specific amount of money for a home loan, subject to conditions you must meet before finalising the mortgage. While it’s not a guarantee of approval, it indicates that your application fits the lender’s criteria.

If pre-approvals are not actual loan approvals, is there any merit to getting them? Here are some things you need to know about mortgage loan pre-approvals to answer that question. 

There Are Two Types of Pre-Approvals

Pre-approvals can be full assessment or online. Full assessments are pre-approvals where lenders perform a thorough credit check before releasing the pre-approval document. 

This usually takes anywhere from a few days to weeks and would affect your credit score. Online pre-approvals involve quick assessments with conditions attached to them. These take a few hours to be released and would not affect your credit score. 

Pre-Approvals Have Expiration Dates 

Lenders usually offer pre-approvals valid between three and six months. This is because a borrower’s financial situation and the real estate market may change over a few months. 

When you apply for a pre-approval, ask your lender how long the approval will last and what can happen if you fail to look for a property before it expires. This also means that it’s not ideal to get pre-approved months ahead of house hunting. 

The Property Can Get You Rejected

A pre-approval does not involve a review of whether the lender approves of your property. Getting pre-approval is not the same as getting approval to make an offer on a piece of property since that approval is contingent upon a satisfactory valuation. 

The lender may only accept properties that meet certain criteria. Ask your broker beforehand what properties they won’t accept to prevent rejection due to the property type. 

Drastic Changes to Your Financial Situation May Get You Rejected 

If your financial situation changes after being pre-approved for a loan, the lender will need to reassess your application. If your income drops or you become unemployed, for example, you may no longer have enough money to afford the loan repayments. 

This can mean that you will have to give up the house or apartment. Some examples include: 

  •  Becoming self-employed
  • Changing careers
  • Going part-time
  •  Having children or dependents
  • Taking on a new loan
  •  Spending your deposit on other expenses
  •  Uncovering information you didn’t disclose on your initial application

New Interest Rates Can Influence Your Approval 

Interest rates fluctuate depending on the market forces. When interest rates are high, it means that you can borrow less money and vice versa. Although this may not mean outright rejection of your application, it will affect the terms of the agreement. Before you sign a mortgage, remember to check the amount, rates, and terms beforehand. 

Sellers May Give You Priority with a Pre-Approval 

If you have pre-approval on a mortgage, you can make an offer on a new home before others in the market even know the property is for sale. This will allow you to negotiate with sellers before they’ve had time to receive other offers. Moreover, real estate agents may ask for a pre-approval letter before they will accept your offer. 


Pre-approvals provide many benefits to house hunters, but you have to realise that a pre-approval is not a mortgage approval. Changes in your status and the market can lead to a vast difference between the pre-approval terms and the actual mortgage terms.

However, even if you’re afraid of your application being rejected, never withhold information from your mortgage broker. They can help you find a better mortgage solution if you are truthful with them from the beginning.

If you are looking for some of the best mortgage brokers in Sydney, Wealthy You is at your service. We offer a wide array of top-notch financial solutions to help you achieve your life goals. Trust that we can handle them all from self-employed home loans and refinance to mortgage loan calculations and investment lending. Team up with us today!