A Guide to Conditional and Unconditional Home Loan Approval

Want to take a bite out of the real estate market? Before you get started, it’s important to maximize your financial situation and agree to increase your chances of getting approved for a home loan.

You’ve put in the hard yards and saved enough for a security deposit, maintained a good credit rating, and signed a stack of paperwork, so what happens next?

In this article, we will discover:

Are you buying a house or looking to refinance? The table below shows home loans with some of the lowest interest rates on the market for homeowners.


Rate Type Gap Redraw Ongoing charges The initial costs LVR Lump sum reimbursement Additional refunds Pre-approval

Variable More details

Smart Booster Home Loan Discounted Variable – 2 years (LVR
  • Fast turnaround times, can meet 30 day settlement
  • For purchase and refinancing, down payment min 20%
  • No ongoing or monthly fees, add 0.10% compensation

Variable More details

Low Rate Home Loan – Premium (Principal & Interest) (Owner Occupant) (LVR
  • No upfront or ongoing fees
  • 100% cleared account
  • Additional refunds + withdrawal services

Fixed More details

Fixed mortgage 1 year (capital and interest) (LVR
  • Make up to $20,000 in additional repayments per fixed term
  • Redraw available – allows you to access any additional loan repayments you have made
  • Choose to lock rates for 90 days (fees apply)

Variable More details

Nano Home Loans Owner Occupied Variable, Principal & Interest (Refinance Only)

  • No application or ongoing fees.
  • 100% free clearing sub-account.
  • Fast online application, approval in minutes not weeks.
  • Mobile app, Visa debit card, Apple and Google Pay
  • Refinance loans and variable rates only.
Variable More details

Homeowner Accelerates – Celebrate (LVR
  • We lower your rate based on the amount you have repaid on your loan
  • Automatic Fare Matching
  • No upfront or ongoing fees

Conditional mortgage approval

Conditional approval, also known as pre-approval, is the highest level of home loan pre-approval where a lender provides an indication of how much they will allow you to borrow based on your current financial situation. .

Approval is ‘conditional’ meaning the lender does not guarantee that they will provide the home loan – they are subject to a number of conditions. These conditions may include:

  • Provide additional information and documents, including bank statements older than originally intended, pay stubs, a property appraisal, or a completed bill of sale from the purchase of the property.

  • Set a specific home loan limit up to which you can borrow.

  • Waiting to provide unconditional approval until you have found the property you wish to purchase.

Although there is no guarantee that you will be approved for the loan you ultimately apply for, conditional approval can give you peace of mind when looking for a home. This is because the process will give you a realistic picture of what you can afford, which will help you avoid the stress of house hunting and the disappointment that could potentially await you.

Unconditional home loan approval

There are no conditions attached to the unconditional approval, which means that the lender has officially approved you for a home loan and no other conditions need to be met.

Upon obtaining unconditional approval, the lender has taken the time to formally assess all of your documents, finances, and loan application and has decided to offer you a home loan based on the property you have identified as the one you have. intention to buy.

Lenders are required to formally notify you in writing the moment your home loan approval becomes unconditional.

Don’t get caught!

Homebuyers can fall into the trap of assuming they have received unconditional approval when in reality no approval has been granted. The risk here is that you could make an unconditional offer to buy a property, only to find that you don’t have approval for a home loan and therefore default completely.

That’s why it’s important to note that a loan cannot be officially approved until your lender has reviewed all documents, proof of your income and expenses, and most importantly, your deposit.

Lose Unconditional Approval

Although highly unlikely, a significant change in financial circumstances following an unconditional approval may result in your home loan being declined. For example, if you were to lose your job, a bank might doubt your ability to repay the loan.

You can also risk losing your mortgage approval if you are required to pay mortgage insurance (MTI) to lenders. If you are subject to IMT, you must also be approved by the lender’s insurer. This means that if the lender and insurer read your application and you are deemed too high a risk, you may lose your unconditional approval.

Time limit

Conditional and unconditional home loan approvals don’t last forever, which means it’s important to strike while the iron is hot.

Depending on the lender, conditional and unconditional approval can usually last three to six months. Once this period has elapsed, you will need to reapply if you are unable to find a suitable property.

Lenders typically offer between three and six months for you to meet their conditional approval requirements before moving on to unconditional approval.

The two cents from Savings.com.au

In an age where homes are selling like hot cakes, conditional approval can help you on your buying journey. By getting conditional approval, you get an indication of how much you can borrow based on your financial situation. This can help you throughout the life of your home loan, as it provides a clear indication of the requirements needed to repay the loan and make the necessary payments. It can also help you get into the real estate market before another buyer who may not have such approval.

It’s important to ensure that once you’ve been granted Unconditional Approval, you maintain your strong financial position to avoid the unlikely scenario of losing Unconditional Approval and potentially your ideal home – something you’ve worked for so hard !

Image by Maria Ziegler via Unsplash.

The whole market has not been taken into account in the selection of the above products. Instead, a reduced portion of the market was considered. Products from some vendors may not be available in all states. To be considered, the product and price must be clearly published on the product supplier’s website. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au and Performance Drive are part of the Savings Media group. In the interest of full disclosure, Savings Media Group is associated with Firstmac Group. To learn how Savings Media Group handles potential conflicts of interest, as well as how we are paid, please visit the website links at the bottom of this page.

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