Home Loan Pre-Qualification Guide
Overview
Pre-qualification is an important first step on the path to home ownership. It gives you an estimate of how much you may be able to borrow based on your financial situation, helping you set a realistic budget before you start house hunting. This guide explains the factors that determine your borrowing capacity, the documents you will need, and the difference between pre-qualification and pre-approval.
Eligibility Factors
Several key factors influence how much you can borrow for a home loan:
- Employment type -Full-time, part-time, casual, or self-employed. Stable employment history strengthens your application.
- Gross annual income -Your total earnings before tax, including salary, bonuses, commissions, and any rental or investment income.
- Existing debts -Credit card balances, personal loans, car finance, and other financial commitments reduce your borrowing capacity.
- Monthly living expenses -Your regular household expenses are assessed to determine the repayment amount you can comfortably manage.
- Credit history -A strong credit score with a history of on-time payments improves your eligibility and may secure a better interest rate.
- Deposit or savings -The size of your deposit as a percentage of the property value affects loan-to-value ratios and may determine whether lender's mortgage insurance is required.
Required Documents
To complete the pre-qualification process, please have the following ready:
- Government-issued photo ID (passport or driver's licence).
- Your last 2 payslips or, for self-employed applicants, the last 2 years of tax returns and a letter from your accountant.
- Bank statements for the last 3 months across all accounts.
- Details of existing debts and financial commitments.
- Evidence of your deposit savings or gifted deposit documentation.
Pre-Qualification vs Pre-Approval
It is important to understand the difference between these two stages:
- Pre-qualification is an initial estimate based on self-reported financial information. It does not involve a credit check and provides a general indication of your borrowing power. Pre-qualification is typically completed within minutes online.
- Pre-approval (also called conditional approval) is a more formal process. It involves verified documentation, a credit check, and a detailed assessment by our lending team. Pre-approval provides a firmer lending commitment and is typically valid for 60 to 90 days. Sellers and agents take pre-approved buyers more seriously.
Frequently Asked Questions
Q: Does pre-qualification affect my credit score?
No. Pre-qualification is based on self-reported information and does not involve a credit inquiry. A credit check is only performed during the pre-approval stage.
Q: How long does pre-qualification take?
Online pre-qualification can be completed in as little as 10 minutes. You will receive an indicative borrowing estimate immediately.
Q: Can I get pre-qualified for an investment property?
Yes. Pre-qualification is available for owner-occupied and investment property purchases. Different lending criteria may apply for investment loans.
Important Information
Your personal and financial data is handled in accordance with regulations enforced by Australian Prudential Regulation Authority (APRA). Deposits are safeguarded by Financial Claims Scheme (FCS). For unresolved concerns, contact Australian Financial Complaints Authority (AFCA).
Need Help?
Our support team is available during Mon-Fri 9:00 AM - 5:00 PM AEST. For urgent matters outside business hours, please call our 24/7 line at 13 22 21.