Unconditional Approval

The Warm Embrace Of Your Lender

How validating and great does unconditional approval sound? Well it doesn’t just sound great, it is great. It’s a glowing green light provided by your bank or lender to go ahead and sign that contract of sale!

An unconditional approval for a home loan, often called ‘formal’ or ‘full’ approval, is the final go-ahead from a lender, indicating they will fully fund your mortgage under the agreed terms. While that last part may sound a little ‘conditional,’ unconditional approval simply means your lender has performed a full review of your documents and there’s nothing more you need to do in order for your bank or lender to write you a loan.

Unconditional Approval — A Whole New World

Welcome to the world of unconditional approval — it really is like the gates of Disneyland for property enthusiasts and investors alike but fortunately, once through those shining gates, you will be given:

• Your lender’s full commitment: Unconditional approval means the lender has reviewed and verified all documentation and assessments, including your income, employment status and records, assets, and the value of the property you’re seeking to purchase. They’re officially committing to providing the funds for your mortgage.
• A completed valuation: The lender has completed a valuation on the property and has confirmed that the property meets their security criteria.
• No more conditions: Whoop, whoop! Unlike pre-approval (conditional approval), which comes with some caveats (such as additional documentation or valuation checks), unconditional approval will have cleared all these hurdles.
• Locked in and finalised loan terms: Unconditional approval confirms the previously agreed-upon terms of your loan (such as interest rates, repayment terms, and loan amount). While minor details might still need adjustment before the settlement, the core terms of the contract will be finalised.
• A settlement date: Unconditional approval is the last step before settlement, where funds will be transferred, and you will take ownership of the property. At this point, you will work with your lender and conveyancer or property solicitor to arrange the settlement date, a.k.a. the finish line.
• Peace of mind: Finally, unconditional approval provides you with the certainty that your financing will be secured, so you won’t have to worry about last-minute issues with your loan approval at least. Instead you can focus on the fun stuff — like organising your move into your new home.

What’s The Difference Between Pre–Approval & Unconditional Approval?

Home loan pre-approval (or conditional approval) means that a lender has agreed, in principle, to lend you money towards the purchase of your home, but hasn’t proceeded to a full and final approval. A pre-approval will give you a clear indication of how much you can borrow from your lender, which in turn helps you focus your search to properties that are within your means. You can seek a pre-approval without yet having put in an offer on a property.

Unconditional approval happens after your offer on a property has been accepted. You usually sign a contract ‘subject to finance’ when you make an offer, so after your offer has been accepted, you can go on ahead and finalise the process for unconditional approval.

Can A Loan Be Denied After Unconditional Approval?

If you’re a fan of catastrophising (and who isn’t in this economy?), even with unconditional approval in place, you might wonder if the proverbial arse can still drop out of it. The answer is yes, but only in extremely rare circumstances will a lender deny a home loan after unconditional approval has been given. Fear not however, the word used was rare and usually the situation can be rectified with additional documentation.