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How long does pre-approval take? | RateCity

Alex Ritchie avatar
Alex Ritchie
- 4 min read
How long does pre-approval take? | RateCity

Whether you’re buying your first property or you’re a long-time investor, going from saving a deposit to being handed the keys can be a time-consuming process if you’re unprepared.

There are several stages involved with purchasing property, and getting mortgage pre-approval is arguably one of the most important. Without pre-approval, you will not know exactly how much you can afford to spend on a property. And pre-approval may help would-be borrowers start on one of the most exciting parts of the property journey: narrowing down ideal real-estate listings.

Let’s explore how long it takes to be pre-approved for a mortgage and look at the home loan journey in full.

The stages of getting a home loan

Getting pre-approval specifically may take several business days, but also depends on the time it takes you to complete the stages before you submit your mortgage application.

There are around six stages of getting a home loan, each with varying timeframes based on your personal financial situation and documentation:

StageAboutTimeframe (approx.)
ResearchUse RateCity’s comparison tools to search for and compare home loan options that may suit your needs. Take stock of the interest rate, fees, features and more to narrow down your choice.Hours to days
ApplicationCollect your personal documentation ahead of time to make the application process easier. This may include:

Personal identification (passport, drivers’ licence)

Bank statements (bank accounts, savings accounts, credit cards etc.)

Proof of income (recent payslips, tax payment summary, income-earning assets)

Note: Try to apply for one home loan at a time as multiple applications may hurt your credit score.

Hours to days
Pre-approvalThe lender you’ve applied for will assess your application and may offer pre-approval. This is not full, unconditional approval. It is an indication that the lender could agree to finance your property purchase, providing your documents are correct and the valuation is suitable. It is also a good indication of how much you may be able to spend on property.1 – 3 business days
ValuationYou’ve found the property you want to purchase. Now the lender will assess the value of the property either through a physical check or online inspection. This will confirm the property meets the amount you’ve been pre-approved to borrow. This is also essential so that the lender knows that if the borrower defaulted on the loan, the sale of the property may help to recover the value lost.1 -3 business days
Unconditional approvalFull approval, or unconditional approval, means that the lender has assessed your personal documents against their eligibility criteria and declared that you meet their terms and conditions. Further, the lender has assessed the value of your property and is confident you’re able to repay the loan. You will be sent formal mortgage documents stating the lender agrees to lend you the funds you need for your ideal property.Up to a week from valuation
SettlementYou’ve received full approval, made an offer on your property and have been approved! All that’s left to do is sign a Contract of Sale and choose a settlement date. The settlement date is generally 4 weeks from the signing of the Contract of Sale.4 weeks

How long does pre-approval last?

Once you’ve researched your ideal home loan and gathered your personal documentation, you should hopefully receive pre-approval for your mortgage. But it’s important to note that pre-approval does not last forever.

Generally speaking, pre-approval may last around two to three months, depending on your lender. This is for your benefit as well as the lenders, as the property market may fluctuate in this time, and you could be approved for more debt than you need if a property decreases in value.

This means that your pre-approval may expire, and you may need to go through the process again. If your pre-approval expires and you’re working with a broker, they may be able to fast-track your application process as the documents should still all be ready to go.

Getting approved for a home loan can be an overwhelming and often time-consuming process. If you’re feeling like you need a helping hand, it may be worth considering if a mortgage broker could offer some relief. RateCity may be able to help you find a qualified broker in your area to offer mortgage advice today.

Disclaimer

This article is over two years old, last updated on July 7, 2021. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.

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This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.