How to Secure Pre-Approval (and Why It Matters) – A Millennial & Gen Z Guide to Buying Your First Home
For many Millennials and Gen Z buyers, getting into the property market can feel like an uphill battle. Between rising house prices, cost-of-living pressures, and the challenge of saving a deposit, it’s easy to feel like homeownership is just out of reach. But it isn’t. The key is knowing where to start—and one of the most crucial early steps is securing pre-approval.
If you’re serious about buying, getting pre-approval from a lender is one of the smartest things you can do to prepare for the process.
Here’s what you need to know, with clear, practical advice made for first-time buyers.
What Is Pre-Approval?
Pre-approval (also called conditional approval) is when a lender agrees in principle to lend you a certain amount of money to purchase a property. It’s based on an initial assessment of your financial situation.
This isn’t the final loan approval—it doesn’t guarantee funding—but it gives you a reliable estimate of your borrowing power and shows agents and sellers that you’re ready to move forward.
Think of it as a “license to house hunt” with real buying potential.
Why It Matters for Millennials and Gen Z
1. You’ll Know Exactly What You Can Afford
You might be casually browsing listings, dreaming about that renovated Victorian terrace—but without pre-approval, it’s just that: a dream. Pre-approval gives you a firm idea of how much you can borrow, so you can narrow your search to properties within your actual budget.
This prevents wasted time, missed opportunities, and disappointment later in the process.
2. You’ll Be Viewed as a Serious Buyer
In competitive areas like Kensington, Ascot Vale or Flemington, the difference between getting the home or missing out can come down to preparation. Vendors and agents prefer buyers with pre-approval because it means you're ready to act. It puts you ahead of the pack.
3. You Can Move Quickly When the Right Property Comes Up
Properties in Melbourne’s inner suburbs often sell fast, sometimes within days of hitting the market. If you’ve already been pre-approved, you’ll be able to make an offer (or bid at auction) with confidence, knowing your lender has already reviewed your finances.
4. It Forces You to Get Financially Organised
Pre-approval isn’t just about the bank approving you—it’s also about you getting clear on your financial health. For younger buyers juggling gig work, subscriptions, and digital payments, this process is a valuable wake-up call. You’ll need to review your spending, your debts, and your saving habits.
It’s an opportunity to clean up your finances and adopt smarter money habits that will benefit you long term.
5. It Reduces Stress During the Search
When you’ve already been pre-approved, you’re shopping with clarity. There’s no second-guessing your price range or wondering if the bank will say yes later. You can focus on finding the right property, not worrying about the loan.
How to Get Pre-Approval: Step by Step
Step 1: Check Your Credit Score
Lenders will definitely look at your credit history. You should too. Services like Credit Simple or Equifax can provide a free report. Make sure it’s accurate and correct any errors early.
A good credit score can give you access to better rates and stronger borrowing power.
Step 2: Gather Your Financial Documents
Be prepared to provide:
- Proof of identification (driver’s license or passport)
- Recent payslips or income statements
- Bank statements from the last 3–6 months
- A summary of assets (car, savings) and liabilities (HECS/HELP debt, credit cards, personal loans)
If you’re self-employed or a freelancer, you may also need:
- Two years of tax returns
- Profit and loss statements
- Business activity statements (BAS)
Step 3: Speak to a Mortgage Broker or Bank
A mortgage broker can help you compare multiple lenders and identify the best fit for your needs and financial position. This can be especially helpful for those with non-traditional income or limited deposit savings.
Alternatively, you can approach your bank directly if you have a good relationship with them—but make sure to compare rates and features carefully.
Step 4: Review Your Spending and Commitments
Lenders now take a closer look at everyday spending. This includes subscriptions, buy-now-pay-later accounts, and lifestyle expenses. You’ll want to cut unnecessary spending, reduce debts, and avoid large purchases (like a new car) during the pre-approval period.
It’s a good idea to track your expenses for a few months and demonstrate consistent savings.
Step 5: Submit Your Application
Once your documents are ready and your finances are in good shape, you or your broker can submit the pre-approval application. The lender will assess your eligibility based on your income, credit history, savings, and debts.
Pre-approval typically lasts between three to six months, depending on the lender.
What Pre-Approval Is Not
It’s worth repeating—pre-approval is not a guarantee of a loan. The final approval depends on factors like:
- A full property valuation
- Final income verification
- No major changes to your financial situation
If you change jobs, take on new debt, or your savings drop significantly after pre-approval, your application could be reassessed.
Common Mistakes to Avoid
- Waiting too long after pre-approval: Once approved, you have a limited window before it expires. Start searching with purpose.
- Overestimating your borrowing capacity: Just because you can borrow a certain amount doesn’t mean you should. Budget conservatively.
- Not understanding hidden costs: You’ll need to factor in stamp duty, legal fees, inspections, and moving costs—on top of your deposit.
Local Perspective: What We See on the Ground
At Rendina Real Estate, we help many young buyers move from planning to purchase every year. In Melbourne’s inner suburbs, particularly Kensington and Ascot Vale, competition is strong, but buyers who are pre-approved are often first to the table—and first to secure a deal.
Lou Rendina, Director of Rendina Real Estate, shares this insight:
“We see it all the time. Buyers who have pre-approval can act quickly and with confidence. They’re trusted by sellers and often win out in competitive situations. It’s one of the best tools a buyer can have.”
Final Thoughts
Homeownership might seem daunting for our generation—but it’s not impossible. Pre-approval is more than just a formality. It’s the first real step towards financial clarity, buying confidence, and ultimately, securing the keys to your future home.
Take the time to prepare, get organised, and get advice. When the right property appears, you’ll be ready to make it yours.
Need Help Getting Started?
The team at Rendina is here to support you at every stage of your homeownership journey—from financial prep to the final handshake. If you're looking to speak with a recommended broker or want advice tailored to your situation, reach out anytime.