How Long Does Home Loan Approval Take?

Home loan approval can take anywhere from a short period for a straightforward application to several business days or longer when additional assessment is required.

There is no standard approval timeframe that applies to every borrower, lender or property. The process may depend on the lender’s current turnaround times, the complexity of your financial circumstances, whether all documents have been supplied and whether a property valuation is required.

Some lenders offer fast conditional decisions for eligible applications. However, a quick conditional response is not the same as formal or unconditional approval.

Understanding each stage of the home loan process can help you prepare your documents, manage important contract deadlines and reduce avoidable delays.

The Different Stages of Home Loan Approval

“Home loan approval” can refer to several different stages. It is important to understand what type of approval you have received before making a financial commitment.

The main stages generally include:

1. Initial assessment

2. Conditional approval or pre-approval

3. Property valuation

4. Formal or unconditional approval

5. Loan documents

6. Settlement

The time required at each stage will depend on your circumstances and the lender’s requirements.

What Is Home Loan Pre-Approval?

Home loan pre-approval, sometimes called conditional approval, is an initial indication of how much a lender may be prepared to lend based on the information available at the time.

The lender may review matters such as:

• Your income and employment

• Living expenses

• Existing loans and liabilities

• Credit card limits

• Available savings or equity

• Credit history

• Proposed loan amount

• Estimated property price

Pre-approval can help you establish a potential property budget before you begin making offers.

However, pre-approval is generally subject to conditions and does not guarantee that the lender will provide formal approval. Moneysmart recommends considering pre-approval before purchasing but also notes that buyers should understand their borrowing position and total purchasing costs.

How Long Does Pre-Approval Take?

The timeframe for pre-approval varies between lenders.

Some lenders advertise conditional approval within minutes or one business day for certain eligible online applications. However, these faster timeframes may only apply where the application meets specific requirements and the information can be verified electronically.

Other applications may require several business days or longer, particularly where the lender needs to:

• Manually review documents

• Verify non-standard income

• Clarify expenses or liabilities

• Review credit history

• Assess a complex ownership structure

• Request further information

• Refer the application to a specialist credit assessor

The timeframe generally begins once the lender receives a sufficiently complete application. Submitting an application without all required documents may delay the assessment.

What Is Formal Home Loan Approval?

Formal approval, sometimes called unconditional approval, occurs after the lender has completed its required assessment and confirmed that it is prepared to provide the loan, subject to the terms of its approval and loan documentation.

Before issuing formal approval, the lender may need to confirm:

• Your financial circumstances

• Your identity

• Your income and employment

• Your deposit or available equity

• The property being offered as security

• The property valuation

• The signed contract of sale

• Applicable insurance requirements

• Any remaining application conditions

Formal approval is different from pre-approval because the lender has generally assessed both the borrower and the specific property.

Westpac’s published home loan process distinguishes between conditional approval and full approval, with loan contracts issued after full approval is obtained.

How Long Does Formal Approval Take?

A straightforward application may progress to formal approval within a few business days after all documents and property details have been received.

However, formal approval can take longer where:

• A property valuation is delayed

• Further financial documents are required

• The application must be manually assessed

• The borrower is self-employed

• There are multiple applicants or guarantors

• Lenders Mortgage Insurance is required

• The property is unusual or considered higher risk

• The application involves a trust or company

• The lender has a high volume of applications

• Information provided in the application needs to be clarified

Approval speed depends on the complexity of the loan and whether the lender has received all required information.

A mortgage broker may be able to provide an indication of a lender’s current assessment timeframe before the application is submitted, but turnaround times can change and should not be treated as guaranteed.

Conditional Approval vs Formal Approval

The difference between conditional and formal approval is important.

You should carefully review the conditions attached to any approval.

An approval described as “conditional” may still require several matters to be completed before the lender will provide formal approval.

What Conditions Can Be Attached to Pre-Approval?

Common conditions may include:

• Finding a property acceptable to the lender

• Obtaining a satisfactory property valuation

• Providing updated payslips or bank statements

• Confirming ongoing employment

• Providing evidence of your deposit

• Repaying or closing an existing debt

• Verifying rental income

• Receiving an acceptable contract of sale

• Obtaining Lenders Mortgage Insurance approval

• Confirming no material changes to your circumstances

• Providing additional identification or supporting documents

The conditions will depend on the application and lender.

Do not assume that pre-approval guarantees the lender will approve every property within the pre-approved amount.

What Documents Are Usually Required?

Providing complete and current documents is one of the most effective ways to prevent unnecessary delays.

Depending on your circumstances, you may be asked for:

Identification

• Driver licence

• Passport

• Medicare card

• Other accepted identity documents

Income documents

• Recent payslips

• Employment contract

• Bank statements showing salary deposits

• Income statements

• Tax returns

• Notices of assessment

• Business financial statements

• Rental income evidence

Financial information

• Savings account statements

• Home loan statements

• Personal loan statements

• Credit card details

• Buy now, pay later commitments

• Evidence of shares or other assets

• Information about regular living expenses

• Details of dependants and financial commitments

Property documents

• Signed contract of sale

• Property details

• Rental appraisal for an investment property

• Building contract

• Plans and specifications for construction finance

• Evidence of building insurance where required

The exact documents required will vary between lenders and borrowers.

Why Do Self-Employed Applications Sometimes Take Longer?

Self-employed borrowers may need to provide more detailed evidence of income than salaried employees.

The lender may request:

• Personal tax returns

• Business tax returns

• Notices of assessment

• Profit and loss statements

• Balance sheets

• Business bank statements

• BAS documents

• Accountant-prepared financial information

• Details of existing business debts

The lender may also need to consider:

• How long the business has operated

• Whether income has increased or decreased

• One-off business expenses

• Director wages

• Company profits

• Business liabilities

• Income retained within the business

• The consistency and sustainability of earnings

Providing clear, current and complete financial documents can help the lender assess the application more efficiently.

How Does a Property Valuation Affect Approval Time?

A property valuation helps the lender determine whether the property provides acceptable security for the proposed loan.

Depending on the property and lender, the valuation may be completed through:

• An automated electronic valuation

• A desktop assessment

• An external inspection

• A full valuation report

• A construction or progress valuation

An automated valuation may be completed quickly where the lender has sufficient property data.

A physical valuation can take longer because an appointment may need to be arranged with the real estate agent, seller, tenant or property owner.

Delays may occur where:

• Access to the property is difficult

• The property is in a less frequently serviced area

• Comparable sales information is limited

• The property is unusual

• The property is still being constructed

• The valuation requires additional review

If the lender’s valuation is lower than the purchase price, the lender may reduce the amount it is willing to lend. This may mean you need to contribute additional funds, change the loan structure or reconsider the purchase.

What Can Delay a Home Loan Application?

Missing or outdated documents

The lender may pause the assessment until the required documents are supplied.

Undisclosed debts or expenses

Information identified through bank statements or credit reporting that was not included in the application may require clarification.

Recent changes to employment

Starting a new job, changing industries, moving into casual employment or being within a probation period may require additional assessment.

Complex income

Overtime, bonuses, commission, allowances, government payments, rental income and business income may be treated differently between lenders.

Credit history concerns

Late payments, defaults, multiple recent credit applications or incorrect information on a credit report may need to be investigated.

Lenders may consider information contained in a credit report when deciding whether to approve an application.

A high loan-to-value ratio

Applications requiring Lenders Mortgage Insurance may need an additional assessment from the mortgage insurer.

Property concerns

Certain apartments, serviced properties, rural properties, unusual construction types or properties requiring major repairs may need further review.

Changes after applying

Taking out a new credit card, personal loan or vehicle finance after applying may affect your borrowing position.

Contract deadlines

A short finance clause may leave limited time for valuation, assessment and formal approval.

Lender workloads

Turnaround times can increase when lenders are processing a high number of applications.

What Can You Do to Help Speed Up Approval?

You cannot control every part of the process, but you can reduce avoidable delays.

Prepare your documents early

Collect current income, savings, liability and identification documents before submitting the application.

Provide complete information

Disclose your debts, credit cards, regular expenses and financial commitments accurately.

Respond promptly

If your broker or lender requests additional information, supply it as quickly as possible.

Avoid applying for new credit

A new credit card, car loan or personal loan may affect your borrowing capacity and require the application to be reassessed.

Keep your finances stable

Avoid making significant financial changes while the application is being assessed unless you have discussed them with your broker or lender.

Check your contract dates

Make sure your broker and conveyancer know the finance approval and settlement deadlines.

Organise property access

Where a physical valuation is required, ensure the valuer can access the property promptly.

Review your credit report

Checking your credit report early may allow you to identify incorrect information or issues before applying.

Should You Make an Offer Before Receiving Pre-Approval?

You may be able to make an offer without pre-approval, but doing so can involve additional risk.

Without an initial lending assessment, you may not know:

• How much you may be able to borrow

• Whether the proposed repayments are manageable

• Which lender policies may apply

• How your income will be assessed

• Whether your deposit is sufficient

• Whether Lenders Mortgage Insurance may apply

• Whether you have enough funds for purchasing costs

A finance condition may provide some protection, subject to the contract wording and applicable requirements.

However, not every transaction is subject to finance. An unconditional contract may require you to complete the purchase even if your home loan is not approved.

Obtain legal advice from your conveyancer or solicitor before signing a contract or making an unconditional offer.

Does Pre-Approval Expire?

Pre-approval is generally valid for a limited period determined by the lender.

If you do not purchase within that period, the lender may require updated documents and a new assessment.

Your borrowing position may also change if:

• Interest rates change

• The lender changes its credit policy

• Your income changes

• Your expenses increase

• You take on new debt

• Your employment changes

• Your deposit changes

• Your credit history changes

Some lenders may refresh or reassess an application when the pre-approval period expires.

Check the expiry date and conditions stated in your approval.

Can Pre-Approval Be Declined Later?

Yes.

A lender may decline the formal application even after granting pre-approval.

This may occur where:

• The property is not acceptable security

• The valuation is lower than expected

• The borrower’s circumstances have changed

• Updated documents show different financial information

• The lender identifies undisclosed liabilities

• The application does not satisfy LMI requirements

• The borrower no longer meets the lender’s policy

• The lender cannot verify the information provided

• The final loan structure differs from the pre-approved application

Pre-approval should therefore be treated as an initial assessment rather than a guarantee.

What Happens After Formal Approval?

Once formal approval has been issued, the lender will generally prepare the loan documents.

The documents may include:

• The loan contract

• Mortgage documents

• Direct debit instructions

• Privacy and consent forms

• Loan terms and conditions

• Any guarantee documents

• Documents relating to an offset account or package

You should read the documents carefully and confirm that the loan amount, interest rate, fees, repayment type and loan features are consistent with what you expected.

You may wish to obtain independent legal advice before signing.

After the documents are completed and returned, the lender will check that any remaining settlement requirements have been satisfied.

Formal approval does not mean that settlement can occur immediately. The lender still needs sufficient time to verify the documents and prepare the loan for settlement.

How Long Does Settlement Take After Approval?

The settlement date will usually be set out in the contract of sale.

The time between formal approval and settlement depends on:

• The agreed settlement date

• When the loan documents are issued

• How quickly they are signed and returned

• Whether the lender has completed its final checks

• Whether insurance requirements have been satisfied

• Whether your conveyancer is ready

• Whether the seller is ready

• Whether sufficient funds are available

• Whether there are any issues with the title or property

Your mortgage broker, lender and conveyancer will generally work together to prepare for settlement.

You should not leave loan documents until the last minute. Delays in signing or returning documents can place the settlement date at risk.

How Long Does Refinancing Approval Take?

A refinance application generally involves a similar financial assessment to a purchase application.

The new lender may need to review:

• Income and employment

• Living expenses

• Existing debts

• Credit history

• Current home loan statements

• Property value

• Available equity

• The requested loan structure

Additional time may also be required for:

• Valuing the property

• Obtaining a payout figure from the existing lender

• Preparing loan documents

• Discharging the existing mortgage

• Coordinating settlement between lenders

Refinancing should not be judged only by the approval timeframe. Interest rates, fees, discharge costs, loan features and the overall financial benefit should also be considered.

Can a Mortgage Broker Speed Up Home Loan Approval?

A mortgage broker cannot control the lender’s assessment or guarantee a particular approval timeframe.

However, a broker can help reduce avoidable delays by:

• Identifying documents required for the application

• Checking the application before submission

• Comparing suitable options from participating lenders

• Considering lenders whose policies may suit your circumstances

• Reviewing available lender turnaround times

• Communicating with the lender

• Responding to assessment questions

• Following up on the property valuation

• Keeping your conveyancer informed

• Monitoring important finance and settlement dates

A properly prepared application may be easier for the lender to assess than an incomplete application requiring repeated follow-up.

The lender still makes the final decision and may request further information at any point.

Questions to Ask About Approval Timeframes

Before submitting your application, consider asking:

1. What is the lender’s current estimated assessment timeframe?

2. When does the timeframe begin?

3. Have all required documents been supplied?

4. Will the application require manual assessment?

5. Is a property valuation required?

6. Could Lenders Mortgage Insurance be required?

7. What conditions will apply to the pre-approval?

8. How long will the pre-approval remain valid?

9. What is the finance approval deadline in the contract?

10. What happens if approval is not received by that date?

11. How long will the lender need to prepare for settlement?

12. Could my employment or income structure require additional assessment?

13. Who will provide updates during the process?

14. Is there anything I should avoid doing while the application is being assessed?

How Long Should You Allow?

It is sensible to allow as much time as reasonably possible for finance approval rather than relying on the fastest advertised timeframe.

Even a well-prepared application can be delayed by a valuation, an additional document request or a matter outside the borrower’s control.

The time you should allow will depend on:

• The lender

• The type of application

• Your financial circumstances

• The property

• The required valuation

• Current assessment volumes

• The terms of your purchase contract

Discuss the proposed finance timeframe with your mortgage broker and conveyancer before signing the contract.

Speak With Homefront Mortgages

Homefront Mortgages can help you understand the home loan approval process and prepare your application before it is submitted.

We can review your circumstances, identify the supporting documents that may be required, compare suitable options available through our lender panel and provide updates throughout the application process.

While no mortgage broker can guarantee approval or a specific turnaround time, submitting a complete and appropriately structured application can help reduce unnecessary delays.

We do not represent every lender or home loan available in the market. The lender makes the final decision regarding approval, the loan amount, interest rate, conditions and assessment timeframe.

Important Information

This article provides general information only and does not constitute personal financial, credit, tax or legal advice. It does not take into account your objectives, financial situation or individual needs.

Home loan approval and assessment timeframes vary between lenders and applications. Any timeframe mentioned is indicative only and is not a guarantee of approval, formal approval, loan-document issue or settlement.

Pre-approval and conditional approval do not guarantee final approval. Final approval remains subject to lender assessment, satisfactory documentation, verification of information, acceptable property security, valuation and applicable lending criteria.

Before entering into a property contract, obtain independent legal advice and ensure you understand any finance, deposit and settlement conditions.

Interest rates, fees, lending policies, eligibility requirements, turnaround times, terms and conditions may change. Fees and charges may apply.