How long does it take to get unconditional approval?

That feeling of walking into an open home, taking a look around and deciding to make an offer can be exhilarating but a little daunting, because in many ways, it’s only the beginning of the home-buying process. Even if the seller accepts your offer for the property, there’s still the question of whether your lender will fully sign off on your loan application, giving what’s known as unconditional approval. So how does this work, what is the significance of it, and how long might you need to wait for it?

What is unconditional approval?

When a lender gives their unconditional approval, it means that they have made their final decision to approve your home loan application, and lend you whatever money you wish to borrow. This means that the lender has fully considered your application and your financial position, and has effectively given the ‘green light’ for your home loan to proceed.

It is also possible to obtain conditional approval for a home loan, which is known as pre-approval. This means that a lender has taken a look at your finances and indicated that they will theoretically be happy to loan you money for a home loan, as long as certain conditions are met.

How long does it take to get unconditional approval?

The time it takes to get unconditional approval from your bank or lender can vary – it might take as little as a day, or it might take a week or longer, depending on how much information your lender already has, how busy they are processing applications, and how long it takes them to undertake the necessary checks on the property.

Before giving unconditional approval, your lender will want to review all the documents you have provided, to get a clear understanding of your finances, and will also want to undergo other checks such as obtaining a valuation of the property. They will do this in order to make sure you can service your home loan.

If the lender is satisfied that you will be able to meet your repayment obligations on the home loan, and are satisfied with the property valuation amount relative to how much you’ve offered, then you’ll receive a statement informing you that your home loan application has been approved. This statement will likely include certain information including:

• The loan amount that your bank or lender is willing to offer you
• Your annual interest rate
• An indication of what your repayments would look like on a monthly, fortnightly or weekly basis.

Why does unconditional approval matter?

Generally speaking, when you make an offer on a home, the contract will include what’s known as a finance clause. This means that, once the seller has accepted your offer, the sale will be conditional on whether you can obtain finance.

If a bank or lender approves your application for a home loan within the finance period, then the sale can go ahead, and if not, the contract can fall through, and you could potentially forfeit some or all of your deposit. For this reason, it’s important to know that your application has been approved unconditionally so that your purchase of the property can proceed.

Generally speaking, a finance clause will allow 14-21 days after the contract date for a buyer to obtain finance. If you want to speed the unconditional approval process up, either so you can offer a shorter finance clause or just for your own peace of mind, then one possible way to do this can be to obtain home loan pre-approval.

How long does it take to get home loan pre-approval?

If you want to get ahead of the game in your property search, then one option is applying for home loan pre-approval. It can take anywhere from several business days to several weeks for a pre-approval application to be processed, although a number of lenders say they are able to give applicants an outcome on the same day as applying. Generally speaking, the more complex your finances are and the busier your chosen bank or lender is, the longer you might expect the process to take.

Once you have obtained home loan pre-approval, it will typically remain valid for around two to three months, at which point, if you want it to remain active, you may need to provide your lender with up-to-date documents to confirm your current financial position.

An advantage of obtaining pre-approval is that it can give you a good idea of how much a bank or lender might be willing to loan you. It can also speed up the property purchasing process, allowing you to make an offer with confidence. You may even be able to offer a shorter finance clause than normal, as the work of applying for finance has mostly already been completed, potentially giving you an edge if the seller would prefer a faster transaction.

How can you speed up the approval process?

When applying for a home loan, it helps to have all the necessary information and documentation ready ahead of time, so you will be able to supply your prospective lender with everything they’ll need to make their decision. The kinds of documents your lender may require include:

• Identification (e.g. a driver’s licence or passport)
• Proof of your employment
• Pay slips
• A list of your existing assets and liabilities
• A list of your expenses
• Tax returns
• Bank statements
• Tax returns

These will not necessarily need to be presented physically, as lenders may accept digital copies of many of these documents.

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