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The importance of pre-approvals: All you need to know

By Alison Borland


The property boom is showing no signs of letting up any time soon. It’s super competitive out there with many vendors receiving multiple offers within just a few days of going on the market. So, if you are looking to purchase your first home or make a move, pre-approvals are essential.

What is a pre-approval? 

A pre-approval is confirmation from a lender that they are prepared to lend you money. However, it’s a conditional offer – usually based on the value of the property you want to buy.

Why are pre-approvals so important? 

Pre-approvals are a good idea for several reasons:

  • You know what your budget is. You can begin to start house-hunting with confidence knowing exactly how much you can borrow.
  • It speeds up the process. When you find the right home, being able to act quickly could make all the difference. A pre-approval should reduce the wait time for your full loan to come through.
  • Sellers expect them. In the current red-hot market, many sellers won’t accept your offer without a pre-approval in place.

A pre-approval gives you confidence going into auctions. And it shows sellers that you mean business. However, most are only valid for six months, and some for only three, so you need to act quickly.

How do I get a pre-approval? 

That’s where we come in. Here at Loan Market, we can help you get a pre-approval. Our expert team will guide you through the process. Plus, our advisers have access to over 20 Lenders to make sure you get the best solution for your needs.

Sounds great. What information will I need to provide? 

Most lenders will expect to have the following information to assess your pre-approval application.

  • Proof of ID: Your passport or driver’s license.
  • Proof of income: Lenders want to see a minimum of three months of your most recent payslips. And if you are self-employed, last two years financial accounts.
  • Bank statements: Up to three months of the most recent bank statements for your current account.
  • Your deposit: The lender will need evidence that you have the funds available to cover the deposit. It could be statements from your savings account, a KiwiSaver withdrawal or a HomeStart Grant approval.
  • Proof of address: A utilities bill or rates demand with your name and address on it.
  • Your budget: Lenders will also want an idea of how much money you are looking to spend on a new home, so be realistic about your budget.
  • Your expenses: Potential lenders will take into account your monthly expenses as they want to be sure you can afford the repayments. Expenses include regular monthly outgoings such as rent, utilities, groceries, even your gym membership.
  • Your debts: Include details of all the money you owe on credit cards, overdrafts, hire purchase agreements or After-pay. It’s a good idea to try and clear your debts as much as possible beforehand.

If you are considering applying for a pre-approval, then get in touch with your adviser. A pre-approval can kick-start your home-buying journey, so get started today.

This article was supplied by Bruce Patten, a Loan Market mortgage broker since 2002 who has written over $1 Billion in home loans for his client and is considered one of the most experienced mortgage brokers in Auckland.Bruce is always on hand to answer any questions you may have about loans or anything around the loan process. Get in touch with him anytime 
by phone (021 661 114) or email (bruce.patten@loanmarket.co.nz).
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