Why pre-approval expires after 90 days
Home loan pre-approval is not a promise from the bank. It is a conditional statement that, based on the information you’ve provided and today’s credit policy and interest rates, the bank would be likely to lend to you. That conditional statement has a shelf life, typically 90 days, for good reasons.
Why the 90-day window
1. Your financial circumstances change. Three months is long enough for your employment to change, your income to shift, or your existing liabilities to grow. Lenders won’t accept a pre-approval built on stale data.
2. Interest rates move. Three months of RBA decisions or swap market movement can shift the rate on your formal loan offer. Pre-approval at 6.0% doesn’t translate to formal approval at 6.25%.
3. APRA serviceability buffer updates. If APRA changes the serviceability buffer during your pre-approval window, your old calculation is invalid.
4. Credit policy updates. Lenders revise policy quarterly. A loan that passed credit on Day 1 may fail on Day 91 because the lender tightened a specific metric.
5. Your credit file changes. If you applied for a credit card, took out personal finance, or missed a payment during the 90 days, your file no longer matches the pre-approval assessment.
What pre-approval actually commits to
Almost nothing. A pre-approval letter typically says the bank has reviewed your income, expenses, and credit file and would be prepared to consider a loan of up to $X at Y% LVR, subject to:
- Formal property valuation
- Final credit verification at the time of the specific purchase
- No material change in your circumstances
- Lender’s sole discretion
In legal terms, you cannot enforce a pre-approval. It’s marketing.
What it’s useful for
- Setting your confident purchase ceiling (so you don’t bid at auction for a property outside your affordable range)
- Signalling seriousness to real estate agents in private-treaty negotiations
- Compressing the timeline between contract exchange and formal approval (you’ve already submitted most of the supporting documents)
The practical strategy
Pre-approve when you are within 3 months of actively searching. Don’t pre-approve 6 months before; the paperwork will have expired and you’ll be doing it twice.
Renew within the 90-day window if your search stretches. Most lenders renew without a full re-application, but they re-run your credit file and confirm any employment or income changes.
Pre-approval vs “formal” approval
Pre-approval: conditional, based on financial information, not tied to a specific property.
Formal approval: issued after you have signed a contract and the property has been valued. The lender has now verified everything and committed to specific loan terms on a specific property.
Between the two, the main risks are:
- Valuation below contract price (forcing you to top up or renegotiate)
- Last-minute changes in credit policy or your credit file
For competitive auction attendance, insist on “pre-approval plus valuation” from lenders who offer it. This reduces post-auction surprises.
Where pre-approval goes wrong
1. Borrowers treat it as binding. It isn’t.
2. Borrowers apply for pre-approval at 4 lenders simultaneously. Each application is a credit enquiry. Multiple enquiries in a short window tank your credit score and may cause subsequent applications to decline. Apply at one lender at a time; if they decline, rework the application before trying another.
3. Pre-approval carries over after a job change. It doesn’t. Notify your broker or lender of any material employment change.
4. Applying too early. 3 months out is the sweet spot; 6+ months is premature.