How long does pre-approval last?

Home loan pre-approval usually lasts for 3 to 6 months. After that it expires, and if you have not found a property and moved to a full loan application, you will generally need to renew it. Pre-approval is not a promise of finance. It is an indication from a lender that, based on the information you have given so far, you appear eligible to apply for a loan up to a certain amount.

If you are house hunting, knowing how long pre-approval lasts matters. Search too early and your approval can lapse before you find the right home. Leave it too late and you may miss out on a property because you cannot move quickly. This guide explains the typical pre-approval window, what makes pre-approval expire, and what to do when it runs out.

How long does pre-approval last in Australia?

For most lenders, pre-approval lasts for 3 to 6 months. The exact period depends on the lender and your circumstances, so always check the timeframe on your own pre-approval.

During this window the lender has reviewed evidence of your current financial situation, such as your income and expenses, to assess your ability to repay a loan. That assessment is a snapshot in time. As the months pass, your finances and lending conditions can change, which is why pre-approval does not last indefinitely.

It helps to think of pre-approval as a head start, not a finish line. It tells you a realistic price range and shows sellers and agents that you are a serious buyer. It does not commit you to a loan, and it does not commit the lender to one either.

Does pre-approval expire, and what makes it lapse?

Yes. Pre-approval expiry is built in. Once the 3 to 6 month period ends, the approval is no longer current and the lender will want to look at your situation again before you proceed.

A few things can shorten that window or cause pre-approval to lapse sooner:

• Your income or employment changes, for example moving jobs or reducing your hours.
• You take on new debt, such as a car loan, a personal loan or a higher credit card limit.
• Interest rates or a lender’s lending criteria change during your search.
• The property you choose does not meet the lender’s requirements, since most pre-approvals are subject to a valuation and final checks on the specific home.

Because the assessment is based on the information you provide and the conditions at the time, anything that materially changes your position can affect whether the loan ultimately proceeds.

What to do when your pre-approval is about to expire

If your pre-approval is close to its expiry date and you are still looking, you have a few options. Most buyers renew or refresh their pre-approval rather than let it lapse.

To renew, the lender typically reviews up to date evidence of your finances. Keeping recent payslips, bank statements and a current view of your expenses on hand makes this faster. If your circumstances are broadly the same, renewal is usually straightforward.

Where pre-approval sits in the home buying process

Pre-approval is one step in a longer sequence. It comes after you have a deposit and a sense of your budget, and before you start making offers. A common order looks like this:

Your deposit size also affects your costs along the way. If your loan to value ratio (LVR), the size of your loan compared with the value of the property, is above 80 per cent, you may need to pay lenders mortgage insurance (LMI). LMI is a one off fee that protects the lender if you cannot repay the loan. A lower LVR generally means lower costs and a better chance of loan approval, which is worth keeping in mind while your pre-approval is live.

To get a feel for repayments at different loan sizes during your search, try the MoneySmart mortgage calculator. Keep in mind that calculator results are estimates only and do not take your personal circumstances into account, and using a calculator does not guarantee you will be eligible for a loan. You will still need to satisfy your lender’s lending criteria.

If you are buying your first property, our guide to home loan pre-approval for first home buyers walks through the same steps in more detail.

You can also see the wider sequence in our first home buyer process guide.

How to keep your pre-approval strong while you search

A few habits help your pre-approval stay current and your eventual application run smoothly:

• Keep your finances steady. Avoid large new purchases on credit and try not to change jobs mid search if you can help it.
• Have your paperwork ready. Knowing the documents needed for a home loan application means you can refresh or finalise quickly.
• Know your real budget. Understanding your borrowing power as a first home buyer helps you search within range and reduces the chance of a knock back at full approval.
• Track your dates. Note when your pre-approval was issued and when it expires so you can plan a renewal before it lapses.

You can learn more about the home loan process on our home loans hub.

Frequently asked questions

Talk to the team at Finance Lab

Timing your pre-approval well can make the difference between moving fast on the right home and watching your approval lapse. The team at Finance Lab can help you understand how long your pre-approval lasts, when to renew it, and how it fits with your deposit, budget and the lenders that may suit your situation. Get in touch to talk through where you are in your search.