How to Improve Your Financial Position Before Applying for Pre-Approval
If you’re thinking about buying your first home, pre-approval is often one of the first milestones people aim for. But before you apply, there’s an important step that can make a real difference to your outcome — preparing your financial position.
Pre-approval isn’t just about how much you earn. Lenders assess your overall financial behaviour, including how you manage money, how consistent your income is, and how much risk you present as a borrower.
This guide walks you through practical, achievable steps you can take to improve your financial position before applying for pre-approval, helping you move forward with confidence.
Step 1: Review Your Current Financial Snapshot
Start by getting a clear picture of where you stand. This means understanding your income, regular expenses, existing debts, savings, and credit commitments.
Knowing your full financial position helps you identify strengths and areas that may need improvement before applying. It also sets realistic expectations around borrowing and repayments.
Step 2: Reduce or Clean Up Existing Debt
Existing debts play a major role in pre-approval assessments. Credit cards, personal loans, car finance, and buy-now-pay-later accounts all affect borrowing power.
Where possible, reduce balances or close unused credit facilities. Even unused credit limits can be considered by lenders, so simplifying your debt profile can improve your position.
This step alone can have a noticeable impact.
Step 3: Stabilise Your Income Where You Can
Lenders value consistency. Regular, predictable income helps demonstrate your ability to meet repayments over time.
If possible, avoid changing jobs or employment types immediately before applying. If your income is variable or self-employed, ensure your records are up to date and clearly documented.
The clearer your income appears, the smoother the assessment process tends to be.
Step 4: Review and Manage Your Living Expenses
Your spending habits matter just as much as your income. Lenders review transaction histories to understand how you manage day-to-day finances.
Before applying, review discretionary spending and identify areas where you can show more consistency. This doesn’t mean cutting all enjoyment — it means demonstrating control and awareness.
A period of steady, predictable spending can strengthen your application.
Step 5: Build and Maintain Genuine Savings
Genuine savings show discipline and financial responsibility. Regular savings over time are often viewed more favourably than one-off deposits.
If you’re still saving for a deposit, consistency matters. If you already have savings, keeping them intact helps demonstrate stability.
This reassures lenders that you can manage repayments alongside other expenses.
Step 6: Avoid New Credit Applications
Applying for new credit shortly before pre-approval can negatively impact your assessment.
Credit cards, personal loans, and buy-now-pay-later accounts can all reduce borrowing power and raise questions during the review process.
If pre-approval is on your horizon, it’s generally best to pause new credit unless absolutely necessary.
Step 7: Keep Your Financial Behaviour Consistent
Consistency is key once you start preparing for pre-approval.
Large unexplained transactions, irregular cash movements, or sudden changes in spending can trigger additional questions from lenders.
Keeping your financial activity steady and transparent helps avoid delays or complications.
Step 8: Present Your Accounts Well
Bank statements tell a story. Overdrawn accounts, missed payments, or frequent dishonour fees can weaken your position.
Ensuring accounts are in good order — with regular income deposits and minimal negative events — helps present a stronger overall picture.
Step 9: Understand What You’re Comfortable Borrowing
Pre-approval is about more than what a lender will approve — it’s also about what feels right for you.
Understanding a realistic repayment range based on your lifestyle helps prevent overcommitting and positions you as a responsible borrower.
This clarity is valuable when discussing options during the application process.
Step 10: Get Guidance Before You Apply
Preparing for pre-approval doesn’t have to be guesswork. Knowing which factors matter most — and where small changes can make a big difference — can save time and stress.
Chase Douglas has extensive experience in mortgage lending and works closely with first-home buyers to help them strengthen their financial position before applying for pre-approval.
From reviewing income and expenses to identifying practical improvements, Chase helps ensure you’re well prepared before approaching a lender.
Prepare First, Apply With Confidence
Taking the time to improve your financial position before applying for pre-approval can lead to better outcomes, clearer options, and less stress throughout the buying process.
If you’re thinking about buying your first home and want to make sure you’re putting your best foot forward, now is the right time to
talk to Chase.
With the right preparation and guidance, pre-approval becomes a confident step forward — not a hurdle to overcome.
