What documents do I need for a pre-approved mortgage?

What is home loan pre-approval?

Home loan pre-approval, also known as conditional approval, is when a lender agrees in principle to loan you up to a certain amount of money towards the purchase of a home. 

A pre-approved mortgage provides insight into your buying power, allowing you to budget and manage your finances accurately when purchasing a property.

How do you get pre-approved for a home loan?

There are several steps involved in obtaining pre-approval for a home loan:

1. Shop and compare home loans to see which options are available and what might suit your needs.
2. Choose a lender or a mortgage broker.
3. Apply for a home loan, specifying you have not picked a property to buy. Many lenders (and mortgage brokers) have an online application process, or you may prefer to organise a face-to-face meeting.
4. Supply a range of documents and information (discussed below). The lender will then assess your application.
5. If you’re pre-approved, the lender (or broker) will send you information about how much money you may be able to borrow and how long that pre-approval lasts before you need to reapply.
6. Review your offer from the lender. If you’re unhappy with the outcome, you may be able to renegotiate terms or consider trying other lenders or brokers.

Keep in mind that even once you have obtained a home loan pre-approval letter, it’s no guarantee you’ll be granted a loan for a specific property. 

The lender will most likely run a property valuation check and reassess your application in more detail when you sign a contract to buy.

What documents do you need for a home loan pre-approval?

The bulk of the work when applying for any home loan can be in putting together the paperwork needed to submit your application. 

We’ve compiled a list of documents and information lenders generally request when applying for a pre-approved home loan.

1. Credit score

While you won’t have to supply your credit score yourself, it is a metric that your home loan lender will likely look at during the pre-approval process. Before applying, it could be a good idea to check your credit score for free online using Canstar’s credit score checker.. 

A credit score is a number that reflects some elements of how you’ve managed money in the past. For instance, if you have a credit card or personal loan, your credit score may reflect whether you’ve made all your repayments on time.  

Your credit score will be one of the factors lenders consider when deciding whether to approve your loan, how much you can borrow, the interest rate of your loan, and other terms your lender may offer. 

If you find you have a low credit score, there are ways you might improve it before applying to be pre-approved for a mortgage.

2. Proof of identity

All lenders are legally required to request proof of ID when assessing a loan application. 

Generally speaking, you may only need one or two pieces of photographic identification—like a passport or driver’s licence—to prove your identity. Though, you may be asked to provide a mix of the other types of ID, like a Medicare card, birth certificate, or a utility bill showing your name and address. You may also need to provide dated and certified copies of your original proof-of-identification documents. 

There are several ways you can certify your documents:

• Going to your local Justice of the Peace (JP) to verify and sign your documents. 
• If you opt to apply for pre-approval in person at a bank, a qualified bank officer may also verify your identity and certify your documents for the loan.
• You may be able to go through an electronic ID check through a lender’s online application process, which is becoming common practice.

3. Proof of income and employment

To understand your financial situation, lenders will also ask for proof of your income and employment. For your mortgage pre-approval application, you will generally need the following:

• If you’re an employee: a copy of your most recent payslips and payment summary (also known as a group certificate) from your employer.
• If you’re self-employed: your personal and business tax returns for the past few years.
• If you have rental income: the most current signed lease, your most recent rental statement, tax return no older than 18 months, or bank account statements showing rental income for any investment properties.
• If you have other income sources: you’ll generally need to provide documents detailing them.

4. Deposit and savings

Lenders will also ask for proof of your current savings when you apply for a pre-approval mortgage. 

This information also functions as an estimate of your potential home loan deposit. Lenders will generally ask for bank statements showing your income and savings from the last three months.

5. Your expenses

To assess your ability to make repayments, lenders may also ask for documents detailing your everyday living expenses. This could be bank statements, as well as invoices for your utilities, groceries, or petrol bills.

6. Current debts

Your lender will want to know if you have debts or financial obligations. These can be considered as potential liabilities and could impact your borrowing power. 

Examples could include personal or car loans, study or student loans, or any ongoing credit card debts. If you have a credit card, lenders may also ask for your maximum credit limit.

7. Assets

It’s also important for you to inform lenders of any assets you own.

Assets worth noting to lenders may include:

• Property
• Superannuation
• Investments (such as shares)
• Vehicles
• Jewellery
• Furnishings 

8. Property wish list

Even if you don’t have a definite property in mind yet, lenders like to have a general idea of what you’re planning to purchase with the home loan you’re applying for. Lenders may want to know:

• Price range of the properties you’re interested in
• The suburb or area you’re looking to purchase in
• What type of dwelling you wish to buy
• If it’s an investment property, what rental return you are hoping to achieve

Now that you have your documents prepared, you can start comparing home loans with pre-approval using Canstar’s free comparison tool.

Is it safe to apply for a home loan online?

While most lenders and brokers have an online portal or dashboard for sending sensitive documents to them safely, it’s a good idea to pay attention to any potential lapses in security. 

For example, to use their online submission process, lenders will typically require you to set up a login and password, sometimes even two-factor authentication.

Some lenders or brokers may also use companies specialising in online document security, such as DocuSign.

If you have any concerns about sending your sensitive documents online, it’s worthwhile asking your lender about their online security. It’s also a good idea to avoid sending sensitive information in emails (ID documents and payslips, for instance) and to double check any links sent to you before clicking on them.