What pre-approval actually is
A bank assesses your income, expenses, debts, deposit and credit history, then issues a conditional approval up to a maximum lending amount. Conditions almost always include a satisfactory property, a valuation where required, and confirmation that nothing about your situation has changed.
It is not an unconditional loan offer. The property still has to meet the lender's criteria, which is why an offer should stay conditional on finance unless your adviser has confirmed otherwise.
What you will be asked for
Preparing these before you apply is the difference between days and weeks.
- Photo identification and proof of address.
- Three months of bank statements for all everyday and savings accounts.
- Recent payslips, or two years of financials and tax returns if you are self-employed.
- A KiwiSaver balance statement if you are withdrawing for the deposit.
- Details of every debt: limits, balances and repayments.
- A budget showing your regular household spending.
How long it takes and how long it lasts
A complete application is usually assessed within three to ten working days, depending on the lender's queue and the complexity of your income.
Most pre-approvals run for around 90 days. They can generally be renewed with updated payslips and statements if you have not bought within that window.
What can undo a pre-approval
Approvals are granted on a snapshot of your position. Change the snapshot and the approval can be withdrawn.
- Taking on new debt, including a car loan or a new credit card.
- Changing jobs, especially into a probation period.
- A drop in income or a period of unpaid leave.
- Missed payments appearing on your credit file.
- A property the lender will not accept as security, such as some apartments or non-standard construction.
Before you apply
It is worth knowing your likely borrowing range before a lender records a formal application. If a check shows you are short of the price you are targeting, addressing commitments or deposit first usually produces a better result than applying and being declined.
Common questions
Does pre-approval guarantee I will get the loan?
No. It is conditional. The lender still needs to approve the specific property and confirm your circumstances have not changed since assessment.
Can I get pre-approval without a property in mind?
Yes, and that is the usual sequence. Most pre-approvals are issued before you have chosen a property, so you know your maximum before you start making offers.
Does applying for pre-approval affect my credit score?
A formal application involves a credit enquiry, which is recorded. Several applications across different lenders in a short period can look unfavourable, which is one reason buyers use an adviser to target the right lender first.
Can I bid at auction with pre-approval?
Yes, but auction bids are unconditional. Confirm with your adviser or lender that your finance, valuation and property type are all settled before you bid.