Pre-approval tells you how much a lender will actually loan you before you start looking at property.
It's not a guarantee, but it's solid enough that you can make offers knowing your finance won't fall through. For concreters, it also shows sellers and agents that someone's already looked at your income, checked the tax returns, and decided you're worth backing. When you're competing against other buyers, that matters.
Why Pre-Approval Matters When You're Self-Employed
Lenders treat self-employed concreters differently than wage earners. Your income gets assessed on tax returns, not payslips, which means what you've declared to the ATO over the past two years is what the bank works with. Pre-approval forces that assessment to happen early, so you know your actual borrowing capacity before you fall in love with a property you can't afford.
Consider a concreter pulling in $120,000 gross but claiming $25,000 in vehicle expenses, tools, and materials. The lender looks at net income after those deductions, not what went into the business account. That might drop your borrowing power by $100,000 or more compared to someone on the same gross wage. Pre-approval puts that number in black and white.
What You'll Need to Supply
You'll hand over two years of tax returns, two years of business financials if you're running a company or trust, recent bank statements showing your income deposits, and proof of any other debts like car loans or equipment finance. The lender checks your Australian Business Number is active and that your income pattern is stable or increasing.
If you've got a ute loan through car loans for tradies, that repayment gets factored into your serviceability. Same goes for any other ongoing commitments. The lender adds up what you already owe and subtracts it from what you could theoretically borrow based on income alone.
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How Long Pre-Approval Actually Lasts
Pre-approval typically lasts 90 days, though some lenders stretch it to six months. After that, it expires and you'll need to reapply with updated financials. If your income drops or you take on new debt in that window, the pre-approval can be pulled or reduced even before it expires.
In a scenario where a concreter gets pre-approved in winter when work is steady, then hits a slow patch in spring and misses two months of invoicing, the lender will ask for updated statements at settlement. If the income's not there, the loan can still fall over despite the earlier approval. Keep your financial position stable between pre-approval and settlement.
Pre-Approval vs Conditional Approval
Pre-approval assesses you as a borrower. Conditional approval assesses you and the specific property you want to buy. Pre-approval happens first and gets you ready to shop. Conditional approval happens after you've signed a contract, and it includes a valuation of the property to confirm it's worth what you're paying.
A pre-approval for $600,000 doesn't mean the bank will lend you $600,000 on any property. If you find a place for $580,000 but the valuer says it's only worth $530,000, the loan amount drops or you'll need a bigger deposit to cover the gap. That's why conditional approval is the real finish line.
How Pre-Approval Affects Your Loan to Value Ratio
The amount you borrow compared to the property value determines whether you'll pay Lenders Mortgage Insurance. Borrow more than 80% of the property value and you'll trigger LMI, which can add thousands or tens of thousands to your upfront costs.
Some lenders offer LMI waivers for tradies depending on your occupation and income level. Pre-approval will factor this in and tell you whether you're eligible, or whether you need to find a bigger deposit to avoid the insurance clip. A concreter with a 10% deposit on a $600,000 property should expect LMI around $15,000 to $20,000 unless a waiver applies.
Fixed, Variable, or Split During Pre-Approval
You don't lock in a specific interest rate at pre-approval unless you're taking a rate hold option, which some lenders offer for 90 days. You do decide on the loan structure: owner occupied or investment, fixed rate or variable rate, offset account or basic package. Those choices shape the loan product the lender pre-approves you for.
If you're buying your first home, variable with an offset usually makes sense because it gives you flexibility to pay extra and pull money back out if the business needs it. If rates are climbing and you want certainty, you might go fixed. Pre-approval doesn't lock you into these choices forever, but changing them later can mean reassessing your application.
What Happens After You Get Pre-Approval
You start looking at properties within your confirmed budget. When you find one and make an offer, you move to formal application with that property attached. The lender orders a valuation, checks the contract, and issues conditional approval. If everything stacks up, you move to final approval and settlement.
Pre-approval shortens the time between contract and settlement because half the work is already done. That can matter when you're dealing with a motivated seller or a tight settlement deadline. It also means fewer surprises, because the hard questions about your income and debts have already been asked and answered.
Call one of our team or book an appointment at a time that works for you. We'll pull together your financials, compare rates across lenders who understand self-employed income, and get your home loan pre-approval sorted so you can shop with confidence.
Frequently Asked Questions
How long does pre-approval take for self-employed concreters?
Pre-approval usually takes three to five business days once you've submitted two years of tax returns and business financials. Some lenders can turn it around in 48 hours if your paperwork is clean and your income is straightforward.
Can I lose my pre-approval before settlement?
Yes, if your financial situation changes between pre-approval and settlement. Taking on new debt, missing income, or losing work can cause a lender to withdraw or reduce your pre-approval even after it's been issued.
Does pre-approval guarantee my home loan will be approved?
No, pre-approval is conditional and still subject to property valuation and final checks. If the property values lower than the purchase price or your circumstances change, the loan can still be declined.
How much deposit do I need before getting pre-approval?
You don't need the deposit in the bank before pre-approval, but you need to prove you'll have it by settlement. Lenders want to see genuine savings or other acceptable sources like family gifts or equity from another property.
What happens if my income dropped in the last tax return?
A drop in income will reduce your borrowing capacity or may lead to decline if the lender sees it as a trend. If you can explain it with evidence of contracts or forward bookings, some lenders will still consider your application.
