This guide will teach you everything you need to know about ANZ’s pre approval.
Pre approval basics.
Cool features specific to ANZ.
And three new case studies that I’ve never shared anywhere else before.
Let’s get started…
- 1. Pre approval: Basics
- 2. Documents needed for ANZ home loan pre approval
- 3. How much can I borrow with ANZ?
- 4. How long does pre approval take?
- 5. How long does ANZ pre approval last?
- 6. Mistakes to avoid with ANZ
- 7. Can you be denied a loan after pre approval?
- 8. Home loan pre approval online
- How we can help you
1. Pre approval: Basics
A pre approval is a broad indication from a bank that they are comfortable to lend you a certain amount of money, subject to a couple of terms and conditions.
Different banks call pre approvals by different names, and in ANZ’s case they refer to it as an Approval in Principle (AIP), or even refer to it as an Approval Subject To (AST).
Don’t get confused, all these different terms mean the same thing.
An in principle approval means just that, the bank is happy to approve your loan provided you meet all of the principles they outline which usually include a bank valuation, credit and LMI approval.
What are the benefits of an in principle approval?
A pre approval, or Approval in Principle gives you a level of comfort around the amount the bank is willing to lend to you.
Benefits of a pre approval with ANZ include:
- ✅ The bank has taken time to assess your loan application (provided they do a full approval, and not an ‘on the spot’ approval).
- ✅ It is valid for between 90 to 180 days (3 to 6 months)
- ✅ It gives you a maximum purchase price
- ✅ You can have confidence your situation meets the bank’s credit criteria
The negatives of a pre approval are:
- ⛔️ You don’t yet know if your new home meets the bank’s criteria
- ⛔️The approval is usually subject to further conditions
- ⛔️Not every banks pre approval can be 100% relied on
Different banks offer various types of pre approvals, ranging from a 90 second online home loan application to a formal approval letter signed off by the banks credit team.
If you need to arrange an approval in principle, we can help out.
Common ANZ Approval in Principle conditions
As I mentioned, pre approvals (or as ANZ refers to them Approvals in Principle) are a conditional approval that is based upon you meeting some conditions before the bank can approve your loan.
These mostly involve the home you are looking at buying because you haven’t found it yet.
Take a look at this example ANZ pre approval letter (they call it Approval Subject to).
ANZ has approved this example loan subject to the following conditions:
- ☑️ Suitable property to be located – In other words, you find a home to buy.
- ☑️ Funds to complete to be furnished once property located – You show the bank your savings and deposit in an account once you find the place.
- ☑️ Contract of Sale for the property is required – When you find the right home to buy, you will sign a contract of sale which is the legal document binding the buyer and the seller to the terms of the sale. This includes your name, the sale price and date of settlement (as well as a bunch of other stuff).
- ☑️ Valuation for the property – Once you find the right home, the bank will arrange a valuation through one of their panel valuers. Nothing for you to do here.
- ☑️ Title search to be completed by ANZ – Again, once you find the right place the bank will do a title search, this is a government registration document which confirms who currently owns the property. Nothing for you to do here.
- ☑️ Rental income from TBA property to be verified within ANZ policy. (if an investment) – This doesn’t apply if you don’t own any other properties.
- ☑️ LVR, UMI (this is what ANZ call LMI) & Security to remain acceptable – This just means that if you have been pre approved for a certain LVR it doesn’t change. In other words, if your pre approval is for a loan of 90% (i.e. 10 % deposit), the bank will approve the loan if you come back and ask for a 90% loan. On the other hand, if you want to change to a 5% deposit loan (i.e. a 95% loan) ANZ bank will want to look at everything again
Case Study: The benefits of an Approval in Principle
Joanne is single and earns $60,000 per year, has no credit cards and no other loans.
She contacted us last year after missing out on a unit in Brisbane because he didn’t have his finance organised.
Based on an online calculator, Joanne thought she could only borrow up to $329,134.
Joanne made an offer on a property at what she thought was the maximum she could borrow, unfortunately, the vendors knocked back her bid because it was $10,000 under what they were after.
A few days after Joanne had her offer knocked back, she got in touch with Hunter Galloway to arrange an approval.
After running the figures through our calculator Joanne discovered she could borrow as much as $369,971.
(That’s $40,837 MORE THAN ANZ)
As you can see from the table, different banks lend substantially different amounts.
In Joannes’ case, Westpac could potentially lend her over $20,000 more than ANZ would consider.
These figures fluctuate regularly, but the point is without a pre approval you’ll never know exactly how much a bank is willing to lend you.
Meaning, like Joanne, you can leave yourself to miss out on the perfect property.
Not only that, you can make more competitive offers with fewer days for finance.
Giving you a better chance of getting your offer accepted.
2. Documents needed for ANZ home loan pre approval
The documents required for an approval in principle are more or less the same as those required for unconditional approval.
At this stage and assuming you are buying a home, you’ll need to get together the following for ANZ to complete their assessment:
- ✅ Complete ANZ Home Loan Application (our brokers help you with this)
- ✅ Identification documents, like a drivers licence or Australian passport
- ✅ If you are employed full time or part-time:
- One most recent payslip (no more than 60 days from the date of the signed application form) plus evidence of income credited to a transaction account for the last 3 month.
- Or if you are self-employed
- Income evidence is required in the form of copies of personal and all associated company/trust/ partnership tax return for the most recent financial year, accompanied by ATO assessment notices (most current year’s figures no more than 18 months old)
- ✅ Copy of bank statements, or accounts showing your deposit funds
- ✅ If you receive rental income, a lease agreement, rental statements from the real estate agent or tax return
These documents are fairly standard across the board and will be used to verify your income
If you receive a bonus or income from a second job the bank might also ask for your PAYG Annual Summary (also called a group certificate).
Our page on the end-to-end home loan process will help with increasing your chances of getting your loan approved quickly.
Read More: Home Loan Process [Step-by-step guide]
3. How much can I borrow with ANZ?
ANZ’s credit criteria are subject to change at any time, and all lending is up to credit verification and satisfactory approval but as an indication, we have run the following scenario through their borrowing calculator:
- ✅ A single person living in Brisbane (In the 4000 postcode)
- ✅ Earning $70,000 PAYG salary income
- ✅ Average monthly expenses of $2,000
- ✅ Has a credit card of $5,000 and no other debts
- ✅ Assuming this person has a 20% deposit as genuine savings
- ✅ Figures as at 21 January 2019, subject to credit criteria and will change without notification.
We run the figures through our serviceability calculator and got the following results:
In this scenario, ANZ is at the lower end of how much you can potentially borrow when compared to some of our other lenders. In fact, they will lend over $44,000 less than the lender at the top.
4. How long does pre approval take?
The pre approval process involves the first 4 steps of the regular home loan process.
You will need to make an appointment with a mortgage broker, or the bank to discuss your situation.
It will then take them 1-3 business days to prepare your loan application.
Once submitted to the bank’s credit team, it will take approximately 3 to 5 business days for your approval in principle.
(Sometimes this is even faster with ANZ)
And from that point, hooray you are pre approved and can go shopping!
5. How long does ANZ pre approval last?
This is a positive aspect of ANZ pre approvals is that of all the banks, their approvals in principle are valid for 6 months.
(Compared to other banks whose approvals are only valid for 3 months)
The bad news is that once your approval in principle expires your mortgage broker will need to submit an entirely new application.
You should get a pre approval if:
- ✅ You are looking at buying a home in the next 3-6 months
- ✅ You have a lease due for renewal soon
- ✅ You have at least 8-10% in savings to cover deposit and stamp duty costs
- ✅ You have a stable income and job
You shouldn’t get a pre approval if:
- ⛔️ You aren’t looking at buying for another 6+ months
- ⛔️ You have just renewed your lease for another 6-12 months
- ⛔️ You do not have any deposit or savings funds
- ⛔️ You might be changing jobs soon
6. Mistakes to avoid with ANZ
Overall ANZ is not a bad lender, with good products and offers to depend ultimately depending on your individual situation.
The only mistake I would suggest avoiding is going ahead with them (or any bank) without first understanding what the market can offer.
Case Study: The phone call that put $1,192 into Dave’s pocket
Dave had found a home to buy and went straight back to his childhood bank ANZ to get a loan.
He’d signed a 21-day contract, so had a little bit of time up his sleeve for finance approval.
ANZ got all of Dave’s information, quoted the rates that were advertised on their website and send him the forms to sign.
A mutual friend of Dave’s suggested he chat to me just to run a second set of eyes across the loan offer before he signed his life away…
I spoke to Dave on the phone and found out ANZ had quoted him $7,887 in Lenders Mortgage Insurance cost.
After quickly checking my system I saw we had another bank who would only charge $6,695 for LMI.
Not only that, this lender had a special for first home buyers offering Dave a really sharp rate.
Dave decided to go with our lender, and use the $1,192 he saved on a couch for his new place!
If you would like us to run our eyes over your banks offer, or just give you a second option get in touch or call Nathan on 0410 000 689.
7. Can you be denied a loan after pre approval?
Unfortunately, approval in principle is no guarantee that your loan will get to unconditional approval.
No bank in Australia will provide a final unconditional approval until you have found the home you would like to buy.
The reason for this is a bank will provide a home loan to you based on:
- ☑️ Your income, and capacity to repay the loan
- ☑️ Your expenses, and how much it costs you to live day to day
- ☑️ Your deposit, and how much savings you put into your home
- ☑️ The home itself, this is the only security the bank holds should something go wrong
…And should anything change with your income, expenses or deposit from the time when the bank has given you approval in principle they might not give you the unconditional approval.
So there is no guarantee your bank will approve your pre approval.
Equally, if the home you are buying doesn’t fit the bank’s credit policy they might also say no.
Not that you would, but you could get a pre approval for $500,000 and want to go buy a house boat.
Its a house after all…?
But unfortunately wouldn’t meet any banks credit policies.
Examples of properties the banks limit home loans on
The banks can be fairly strict around both units and houses but say you were looking at a unit they can put extra criteria on:
- 🏘The suburb or postcode where the property is located, with units they sometimes put restrictions based on inner-city locations.
- 🏘 How many floors a block of apartments has, sometimes with restrictions when it is higher than 4 stories.
- 🏘 The total floor area inside the apartment, with restrictions if it is less than 40 square metres.
- 🏘 If the bank already has too much lending in the building you are wanting to buy in.
It pays to check with your Mortgage Broker before you sign a contract to make sure your (potential) new home fits with the bank’s criteria.
We’ve seen situations where a bank has knocked back a property because it was too close to some powerlines!
We’re more than happy to have a quick check for you, get in touch online or give us a call on 1300 088 065.
8. Home loan pre approval online
And what about online pre approvals…?
These are also known as on the spot approvals, where some banks might advertise being able to get an approval in principle via their branch or in under 30 minutes.
This is a sales tool used by the banks to lure in people to apply for a loan.
On the spot approvals like this are not sent to the bank’s credit department for full mortgage assessment, and for that reason, they generally aren’t worth the paper they are written on.
Most branch managers and staff these days are sales staff, so do not assume they are familiar with all of their bank’s individual credit policies because their job is to bring in new loans and not to assess them.
ANZ is one of the banks who provide on the spot approvals in principle via their branch network, so they aren’t always reliable as they have not been assessed by the credit department.
They also provide some pretty neat reports using their Buy Ready service, but most respectable brokers can help you with these.
At Hunter Galloway, we have a subscription to RP Data so can provide you with as many free electronic valuations as you need. You can also get access to our free 7 Step Course on owning your first home, check it out here.
With access to over 30 lenders, we have a panel of banks who will complete a full assessment of all pre approval applications making sure you have a reliable pre approval. Talk to our team online, or give us a call on 1300 088 065 to discuss your situation.
How we can help you
Our team here at Hunter Galloway have worked in several of Australia’s major banks and even had credit authorities of up to $2M.
We are here to help make your home loan journey easy.
Unlike other mortgage brokers who are just one person operators, we have an entire team of experts to help make your home loan journey as simple as possible.
If you want to get started, please get in touch here and we can book a time that suits you – either a phone call information session or a face to face meeting (which doesn’t cost anything for you).
Further reading for Home Buyers…
- 🏡 For our comprehensive guide for First Home Buyers, check out this page here.
- 🏡 Looking at getting a loan, check out our Complete First Home Buyers guide.
- 🏡 Home Loan Guide to Brisbane
- 🏡 And don’t forget the costs of buying which we covered in detail here.
The information provided in this article is intended to provide illustrative examples based on stated assumptions and your inputs. Calculations are meant as estimates only and it is advised that you consult with a mortgage broker about your specific circumstances