Does home loan pre-approval impact my credit score?
Getting pre-approval is an important step in the home loan process. Not only does it give you an idea of where you stand in a lender’s eyes, it can give you an edge over other buyers when it comes time to make an offer.
But can getting pre-approved hurt your credit score? Below, we explore some ways you can keep your credit profile in good health when seeking pre-approval.
First of all, what is pre-approval?
Pre-approval is a statement provided by a lender indicating how much you would likely be able to borrow. It is conditional, temporary, and there’s no guarantee that you will eventually be granted the loan you were pre-approved for.
Pre-approval usually lasts for around three to six months. So if it’s about to expire and you haven’t yet found a home, you’ll have to re-apply or ask your lender if it can be extended.
Having pre-approval up your sleeve lets you narrow your search to budget-friendly properties. It can also signal to real estate agents that you’re serious about buying, potentially giving you a better shot at securing the home you’re after.
Will getting pre-approval affect my credit score?
Before your lender can grant you pre-approval, they will have to check your credit report for signs that you have been a responsible borrower in the past. When your lender does this, it will trigger what’s known as a ‘hard enquiry.’
A single hard enquiry won’t jeopardise your credit score, but if you rack up several over a short period of time it can certainly weaken it.
So if you’ve applied for pre-approval with multiple lenders in the hopes of finding the best deal, you might give banks the impression that you’ve been rejected multiple times. In turn, they might be reluctant to lend to you.
What can I do to protect my credit score?
- Check your credit report for mistakes before you apply
- Limit the number of applications
- Extend pre-approval instead of re-applying
If you know a lender will be combing through your credit history, it might be a good idea to request a copy of your credit report beforehand to make sure all the information listed is accurate.
If there are mistakes (or issues that have since been resolved), you’ll need to get in contact with your bank to set the record straight.
When it comes time to apply, one of the best things you can do is research your options thoroughly before contacting any banks or lenders. Avoid the scattershot approach and try to hone in on one or two that suit best.
And if your pre-approval period is about to expire and you still haven’t settled on a property, consider having it extended rather than re-applying. If you have to re-apply, it might be better to stick with the same lender rather than finding another one.
What comes after pre-approval?
Once your lender has deemed you a suitable candidate and granted you pre-approval, you can start looking for a home with a clear idea of how much you’ll be able to spend.
Your to-do list will now consist of finding the right property. Once you’ve done that, you can begin the formal home loan approval process.
Your lender will conduct a property valuation and draw up a contract of sale. They’ll also examine your finances a final time to make sure that you can still comfortably afford to service a loan.
Frequently asked questions
How long does home loan pre-approval last?
Pre-approval does not last indefinitely — it’s typically only valid for between three and six months. This is because a lot can change in both the property market and your personal finances over a short period of time.
What documents do I need for pre-approval?
There are a few things your lender will require before they can grant you pre-approval. These include identification, proof of employment and income, a breakdown of your living expenses, and a breakdown of any debts (such as credit cards and any other loans).
Does pre-approval guarantee you a loan?
No. When a lender grants you pre-approval, this is just an indicator of how much someone with your borrower profile might be able to borrow. The amount can always change by the time you’re ready to make an offer, and depending on your circumstances you might even be rejected outright.
Rejection can occur if your financial situation has changed significantly since your conditional approval was granted (think losing your job). Your lender might also take issue with the property you want to buy, which is why approval will often be subject to a valuation.
Does getting pre-approval cost anything?
It shouldn’t cost you any money to obtain pre-approval. Any fees associated with processing your loan are usually charged when the loan is settled.
If you’re thinking of taking out a loan but aren’t too sure where to start, visit our home loan comparison page, or browse the selection below.
Home loan comparisons on Mozo - last updated 26 April 2024
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Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
Unloan Variable
Owner Occupier, LVR <80%
interest rate
comparison rate
Initial monthly repayment5.99% p.a. variable5.90% p.a.Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
CompareCompareUnloan Variable
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
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Mozo experts choice awards won:
- Exceptional Value Home Lender - 2024
Express Home Loan
Owner Occupier, Principal & Interest, LVR <90%
interest rate
comparison rate
Initial monthly repayment6.01% p.a. variable6.14% p.a.Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.
CompareCompareExpress Home Loan
Get fast online approval from the award-winning Bendigo Bank Express Home Loan. Multiple offset accounts and redraw available. 100% offset on variable rate loans and partial offset on fixed rate. Flexible repayment options. New home loans only.
- interest rate
- 6.01% p.a. variable
- comparison rate
- 6.14% p.a.
- interest rate
- 6.01% p.a. variable
- comparison rate
- 6.14% p.a.
- Upfront fees
- $134
- Ongoing fees
- $10.00 monthly
- Discharge Fee
- $350.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 90.00%
- minimum borrowing amount
- $5,000
- maximum borrowing amount
- $3,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Bendigo Bank Express Home Loan
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Discounted Home Value Loan
Owner Occupier, Principal & Interest, LVR 70-80%
interest rate
comparison rate
Initial monthly repayment6.09% p.a. variable6.09% p.a.Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).
CompareCompareDiscounted Home Value Loan
Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).
- interest rate
- 6.09% p.a. variable
- comparison rate
- 6.09% p.a.
- interest rate
- 6.09% p.a. variable
- comparison rate
- 6.09% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $15,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the HSBC Discounted Home Value Loan
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Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
Unloan Variable
Investment, LVR <80%
interest rate
comparison rate
Initial monthly repayment6.29% p.a. variable6.20% p.a.Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
CompareCompareUnloan Variable
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
- interest rate
- 6.29% p.a. variable
- comparison rate
- 6.20% p.a.
- interest rate
- 6.29% p.a. variable
- comparison rate
- 6.20% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Investor
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
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Basic Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR<70%
interest rate
comparison rate
Initial monthly repayment5.99% p.a.
fixed 3 years6.12% p.a.No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.
CompareCompareBasic Home Loan
No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.
- interest rate
- 5.99% p.a.
fixed 3 years
- comparison rate
- 6.12% p.a.
- interest rate
- 5.99% p.a.
fixed 3 years
- comparison rate
- 6.12% p.a.
- Upfront fees
- $350
- Ongoing fees
- $0.00
- Discharge Fee
- $400.00
- Extra repayments
- yes - up to $10,000 p.a.
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 70.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Macquarie Basic Home Loan
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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
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