Also called: Indicative approval, Pre-qualification
Pre-approval
A pre-approval is a lender's indication of how much it is likely to lend, based on information provided before a specific asset or property is identified. It is not a binding commitment and is usually time-limited.
What is a pre-approval?
A pre-approval is a lender's indication of how much it is likely to lend, based on information provided before a specific asset or property is identified. It is not a binding commitment and is usually time-limited.
Example
A buyer holds a 90-day pre-approval for $450,000 and bids at auction knowing the likely ceiling.
Why it matters
It gives confidence to negotiate, but the final decision still depends on the asset, valuation and updated financial position.