How long does home loan pre-approval take?

Why there is no single answer

Pre-approval timeframes vary by lender, by how complex your income and liabilities are, and by how busy that lender's credit team happens to be when your file arrives. Those three things move independently, and none of them is published anywhere you could check.

The same lender can be quick on a straightforward salaried file and slow on a self-employed one in the same week. Whatever somebody was told about their application is not a commitment about yours.

That is why you will not find a turnaround time anywhere on this site. None of them is verified, and a timeframe published by a credit licensee is a promise that licensee has to stand behind.

What the lender is doing while you wait

Almost nobody explains this part, which is why the wait feels so much longer than it is. A pre-approval is not one decision; it is a queue, a read, a verification and a decision, and each of them is somebody's actual work.

1. 1

   The file is lodged

   The application and your supporting documents go to the lender as one package. A file that arrives complete starts being assessed, and a file that arrives short waits for the missing piece before anything happens at all.

2. 2

   It sits in the credit queue

   Your file waits for a credit assessor to pick it up. That queue belongs to the lender, it moves with the lender's own volumes, and no broker can jump it.

3. 3

   An assessor reads it

   Somebody goes through your payslips, statements and liabilities line by line. This is the stage where an unexplained transfer or an undeclared account turns into a question.

4. 4

   Your income and identity are verified

   Employment, income and identification are checked against the documents supplied, and sometimes directly with your employer. Anything that cannot be verified is referred back rather than assumed in your favour.

5. 5

   Questions come back to us

   The assessor raises whatever is unresolved and we answer it. Every one of those round trips adds to the wait, which is the whole reason a file is built to avoid them.

6. 6

   A decision is issued

   The lender either issues the pre-approval in writing with its conditions, asks for more, or declines. Any outcome is subject to lender approval and to your circumstances.

Read down that list and one thing stands out. Most of the elapsed time is queueing and answering questions rather than assessing, and both of those are attacked before anything is lodged.

What makes a file move quickly

A fast pre-approval is usually just a complete one. An assessor works with what is in front of them, and a file with no gaps gives them no reason to stop.

• Every document supplied up front, current, legible and covering the full period the lender asked for
• The right lender chosen first, so your income type is one that lender's policy already accepts
• Liabilities declared in full, including the buy-now-pay-later accounts people forget they have
• Large or irregular deposits explained in writing before anybody has to ask about them
• Stable employment across the documents, rather than a change landing mid-assessment
• A submission that has already answered the questions the assessor was going to ask

That last one carries more weight than it sounds like it should. A submission that pre-empts the obvious questions removes a round trip, and the round trips are where most of the waiting comes from.

The other half of it is lender choice, and that decision is made before a single document is sent anywhere. Putting a file in front of a lender whose policy was never going to accept your main income type costs you a credit enquiry and the whole of the wait.

What slows a file down

Some of these are avoidable and some are simply features of your situation. It is worth knowing which is which before you start blaming anybody.

• Missing, expired or unreadable documents, which is the most common cause we see
• Self-employed income, trust structures and company financials, all of which take longer to read properly
• Overtime, bonus, commission or casual income, where a history has to be established before it counts
• A recent job change, a probation period or a move into contract work
• Marks on your credit file, or a run of recent enquiries the assessor wants explained
• A smaller deposit, and the higher loan to value ratio that comes with it, which commonly attracts a closer manual read and could bring the mortgage insurer in as a second assessor
• A busy period inside the lender's own credit team, which is outside everybody's hands

Notice that the last one is the only entry on that list nobody can do anything about. The rest are either fixed before lodgement or they are not fixed at all.

A fast decision is not always a strong one

Some lenders offer an automated decision generated from the figures you type in, with no credit assessor reading a single document. It comes back quickly, and it is worth exactly as much as has been checked.

A fully assessed pre-approval, where a person has read your documents and signed off on them, takes longer and is far more durable. It is also the one the agent's finance question is really asking about.

The risk with the quick version is that it can fall over later, when the documents are finally read. Finding that out after an offer has been accepted is an expensive way to have saved a little time.

Speed is worth having, but it is worth having second. The pre-approval that holds up is the one that lets you make an offer without lying awake about it.

How long a pre-approval stays useful

A pre-approval does not run indefinitely. The period is set by the lender and stated in your letter, and it differs from one lender to the next, so read your own rather than relying on what somebody else was told.

What matters more than the stated period is whether your position still matches the one that was assessed. When you come back with a property the lender re-tests you, and updated payslips and statements are commonly asked for at that point.

Many lenders could extend or refresh a pre-approval rather than start the whole assessment again, provided nothing material has changed. That is a conversation worth having before yours lapses, not after.

What to keep steady while you are still looking

• No new credit cards, car finance or buy-now-pay-later accounts
• No job change if you can help it, particularly into probation or contract work
• No large transfers in or out that you could not explain in a sentence
• Keep saving in the same pattern the lender saw in your statements
• Get anything the assessor asks for back quickly, because that clock is yours
• Tell your broker early about anything that changes, rather than hoping it goes unnoticed

If your circumstances do move, say so. A pre-approval that is quietly out of date is worse than none at all, because you could go and make an offer believing you are covered.