What’s the Risk With Pre-Approval?
Pre-approval is often seen as a green light to buy — but like any part of the home buying process, it comes with risks if it’s misunderstood or used incorrectly.
The good news is that these risks are manageable once you understand what they are and how to avoid them.
Here’s a clear look at the main risks associated with pre-approval — and why awareness matters.
The Biggest Risk: Assuming It’s a Guarantee
The most common risk with pre-approval is assuming it means your loan is guaranteed.
Pre-approval is conditional, not final. It’s based on the information provided at the time and does not include assessment of a specific property.
If buyers treat pre-approval as a full approval, they can overcommit before all conditions are met.
Your Circumstances Can Change
Pre-approval is issued based on your financial situation at a specific point in time.
If your circumstances change — such as your income, expenses, or debts — the lender may reassess or withdraw the pre-approval.
Even small changes can affect the outcome.
The Property Might Not Be Accepted
A lender doesn’t assess the property until after a contract is signed.
This means a property can be declined due to:
- A low valuation
- Property type or location issues
- Building or zoning concerns
Pre-approval does not guarantee that every property you bid on will be accepted by the lender.
Valuation Risk
Even if you agree on a purchase price, the lender relies on its own valuation.
If the valuation comes in lower than expected, you may need to contribute a larger deposit or renegotiate.
This is one of the most common reasons final approval differs from pre-approval.
Pre-Approval Can Expire
Pre-approvals usually have an expiry date.
If you don’t find a property in time, the pre-approval may need to be reassessed — especially if market conditions or your circumstances have changed.
This can cause frustration if timing isn’t managed properly.
New Debt Can Undermine Pre-Approval
Taking on new debt after pre-approval is issued can weaken your position.
This includes:
- New credit cards
- Car or personal loans
- Buy now, pay later facilities
Even small changes can reduce borrowing capacity.
Credit Enquiries Can Add Up
Applying for multiple pre-approvals across different lenders can result in multiple credit enquiries.
Too many enquiries in a short period can raise concerns for lenders and potentially weaken future applications.
Strategy matters here.
Emotional Overcommitment
Pre-approval can sometimes give buyers a false sense of urgency.
This can lead to rushing decisions, stretching budgets, or ignoring comfort levels.
The risk isn’t just financial — it’s emotional too.
Why These Risks Are Manageable
None of these risks mean pre-approval is a bad idea.
They simply highlight why pre-approval needs to be timed correctly, explained clearly, and used as a planning tool — not a promise.
When used properly, pre-
