Can I Make an Offer Without Pre-Approval in Australia?

By Amie Parker

You can make an offer on a house without pre-approval. I am going to explain in this article why I strongly recommend against it, unless you are comfortable with feelings of significant stress, anxiety and and the possibility of losing a substantial amount of money.

What Is Pre-Approval?

Pre-approval, sometimes called conditional approval or approval in principle, is where a lender assesses your financial position and indicates that it may be prepared to lend you up to a particular amount, subject to specified conditions. It gives you an idea of how much you may be able to borrow so you can focus your property search on a realistic price range.

It is worth being clear about what pre-approval is not. It is not a guarantee of unconditional approval. Several factors can influence whether unconditional approval is ultimately granted, including the property you choose, any changes to your financial circumstances between pre-approval and final approval, and the relationship between the property's value and the offer you make. Treat it as an informed starting point, not a finish line.

Generally, it is a good idea to obtain pre-approval before you start looking at properties with intent to buy, and well before you make an offer or bid at auction. That said, the amount indicated in your pre-approval should not automatically be treated as the maximum you can afford. Your own budget and financial goals matter too.

What If I Make an Offer Without Pre-Approval and It Gets Accepted?

If you find yourself in this position, the first thing to do, before signing or submitting a formal offer, is to speak with your solicitor or conveyancer about including an appropriately drafted subject-to-finance condition. This condition must be written into the offer or contract and accepted by the seller. The seller is not required to accept it, and auction purchases are generally unconditional unless the seller agrees otherwise.

A properly drafted finance condition may allow you to terminate the contract if you cannot obtain finance by the specified date. However, you must comply precisely with the requirements and notification process set out in the contract. Property contract rules differ between states and territories, and the details matter enormously.

Depending on the state and method of sale, you may be asked to sign a contract when making your offer or after negotiations have concluded. You may also be required to pay a deposit in line with the contract terms. The contract deposit is commonly described as up to ten per cent of the purchase price, although a smaller amount may sometimes be negotiated.

One more thing worth mentioning here: do not rely on online calculators as a reliable estimate of how much you will be able to borrow. They can be a useful starting point, but they provide estimates only and may not account for your full financial picture or the differing credit policies used by individual lenders. For a more considered assessment of your borrowing capacity, speak with a mortgage broker or lender. As a broker, I have access to a panel of more than 30 lenders and can assess suitable options based on your circumstances, your goals, and each lender's individual policies.

How Long Does Formal Loan Approval Take?

This genuinely depends on your situation. If your employment is straightforward and your documents are ready to go, the process can move relatively quickly. If you have a more complex employment arrangement, need to chase down documents, or are using a government assistance scheme that requires the lender to confirm your eligibility and the property's eligibility, things can take longer.

Different lenders also have different turnaround times for assessing and approving applications. If your situation suits a lender with a fast processing time and that is the priority, that is helpful. But if your circumstances mean you specifically need the policies of a lender with a slower turnaround, the process could take several weeks. This is one of the reasons why starting early matters so much.

What Are the Consequences If I Cannot Obtain Finance in Time?

Your signed contract may include a specific finance date, and the timeframe can be short. Your broker, lender, and conveyancer all need to know that deadline immediately so everyone can work toward it.

If the contract is subject to finance and you have followed the clause correctly, you may be able to terminate the contract and recover your deposit. However, if the contract is unconditional, if the finance condition has expired, or if you have not followed the required process precisely, you may lose some or all of your deposit. You could also potentially be liable for additional losses beyond the deposit. If the deposit is a significant sum, that outcome could have serious consequences for your home buying plans.

If it looks like finance may not be approved in time, speak with your solicitor or conveyancer immediately. This is not a situation where waiting to see what happens is a sensible approach.

Should I Get Pre-Approval Before Looking at Properties?

Yes. Apply for pre-approval once you are actively preparing to buy, and before you make an offer or bid at auction. Pre-approval commonly lasts around 90 days, although the validity period can vary by lender. In some circumstances, if you have not found a property within that window, some lenders may allow a renewal or extension, but they may also reassess the application, conduct another credit check, or ask for updated documents.

While pre-approval is not a guaranteed outcome, it is an important step. It gives you a working figure to guide your search, and because much of your information has already been collected, it can also help streamline the formal approval process later. Keep in mind that the lender may still require updated income documents, bank statements, confirmation that your circumstances have not changed, a property valuation, and other final checks before unconditional approval is granted.

Understanding your serviceability position, which is how lenders assess your ability to meet loan repayments, is a key part of the pre-approval process. Your broker can help you understand where you stand before you start making offers. It is also worth understanding concepts like LMI (Lenders Mortgage Insurance), which may apply depending on your deposit size and LVR (Loan-to-Value Ratio), so there are no surprises later in the process.

If you are starting to look at properties and wondering what your next step is, I offer a free first home buyer discovery call. I am happy to answer your questions and help you work through what comes next.

Disclaimer: Property contract requirements, cooling-off periods, and finance conditions differ between Australian states and territories and between individual contracts. This article provides general information only and is not legal advice. Always have a qualified solicitor or conveyancer review the contract before you sign or submit a formal offer.