Short answer: once a lender has given you conditional approval, unconditional approval usually follows within a few business days to a couple of weeks. Some files clear in two or three days. Others drag on for a month because one condition keeps bouncing back. How long yours takes depends almost entirely on what the conditions are and how quickly they get answered.

This is the stage people find most nerve-racking. You've signed a contract, the lender has said yes in principle, and the clock on your finance clause or settlement date is running. So it's worth knowing what is actually happening behind the scenes.

What conditional approval means

Conditional approval (sometimes called formal approval with conditions) means a credit assessor has gone through your application and is happy with you as a borrower. They're willing to lend, but a few things still need to be ticked off before the approval is final.

It is a real step forward from pre-approval, which is based on you and not on a specific property. But it is still not a promise. If a condition can't be met, the lender can decline.

The conditions you'll usually see

Every approval letter is different, but most of the conditions we see fall into a handful of groups:

  • Valuation. The lender's valuer needs to agree the property is worth roughly what you're paying. This is the condition that causes the most trouble, and we cover it separately below.
  • Lenders mortgage insurance. If you're borrowing more than 80% of the value, the mortgage insurer may need to approve the loan as well as the lender. That's a second set of eyes on the same file.
  • Documents the assessor still wants. A more recent payslip, a letter from your employer, an explanation for a large transfer on a bank statement, or a signed copy of the contract.
  • Employment checks. Some lenders call your employer to confirm you still work there and what you earn.
  • Strata or building items. For apartments, the lender may want details about the building before it signs off.
  • Refinance items. If part of the loan is paying out another lender, the new lender may want recent statements for the old loan or a signed discharge form.

Some conditions are marked as needing to be met before settlement rather than before approval. Building insurance is the common one. Those won't hold up unconditional approval, but they still need sorting before the settlement date.

Why the valuation is the big one

Most of the time the valuation comes in close to the price and nobody thinks about it again. When it doesn't, the loan-to-value ratio changes, and that can push you over a threshold. Suddenly there's mortgage insurance where there wasn't, or a bigger premium, or a deposit gap you need to cover with cash.

A short valuation isn't always the end of the road. A broker can ask for a review if there are comparable sales the valuer missed, or look at whether another lender's valuer sees it differently. But both take time, and that time comes out of your finance clause. On the North Shore and the Northern Beaches, properties with water views, unusual blocks or very few recent sales nearby are the ones most likely to value awkwardly.

How long each part tends to take

Rough guide only, because lenders vary and busy periods slow everyone down:

  • Valuation: often booked and back within a few business days. Rural blocks, acreage and unusual properties can take longer.
  • Outstanding documents: as fast as you can send them. This is the part you control.
  • Mortgage insurer: can add a few days if it hasn't already approved the loan.
  • Final sign-off: once everything is in, the assessor reviews it and issues unconditional approval. Usually a day or two, longer if the lender has a queue.

Most of the delays we see aren't the lender being slow. They come from a condition getting answered with the wrong document, or the answer raising a new question. When a broker reads the conditions on day one and sends a complete response, the whole thing moves a lot faster. Our wider guide on how long home loan approval takes covers the earlier stages too.

Lining it up with a NSW finance clause

In NSW, a private sale usually comes with a five business day cooling-off period. That is rarely long enough to get from signed contract to unconditional approval. If you need more time, your solicitor or conveyancer can ask for a longer cooling-off period or a finance clause as part of the contract. Whether the seller agrees is a negotiation.

Auctions are different. There's no cooling off and no finance clause, so you're committed when the hammer falls. That's why we'd want the pre-approval properly assessed and the property checked before auction day. See our post on finance before you bid for more.

Either way, keep your solicitor and your broker talking. If a condition looks like it won't clear before your deadline, the earlier your solicitor knows, the more options there are.

What can go wrong between the two

Loans don't fall over at this stage often, but when they do it's usually one of these:

  • The valuation comes in well under the price and you can't cover the gap.
  • The mortgage insurer won't approve the loan, even though the lender would.
  • Something changes in your finances, like a new job, a new car loan or reduced hours.
  • The assessor finds something in a document that wasn't disclosed, such as a debt or regular payments to a buy now, pay later account.
  • A problem with the property or the building comes up in the strata or contract review.

The best protection is boring: don't take on new debt, don't change jobs and don't move large sums around between signing and settlement unless you've spoken to your broker first.

After unconditional approval

Once you're unconditional, the lender sends out loan documents for you to sign. When they're back and checked, the lender confirms it's ready and settlement can be booked with your solicitor or conveyancer and the seller's side. At that point you can usually tell the agent your finance is sorted.

If you're buying or refinancing and want someone watching the conditions for you, get in touch or call 1300 001 755. We're based in Forestville and work with buyers across Sydney's north, from Chatswood to Dee Why.

Frequently asked questions

How long does it take to get unconditional approval?

Usually a few business days to two weeks after conditional approval. It depends on how quickly the valuation comes back, whether mortgage insurance is involved, and how fast outstanding documents are supplied.

Can a loan be declined after conditional approval?

Yes. If a condition can't be met, such as a low valuation or a change in your finances, the lender can decline. It doesn't happen often, but it's why conditional approval isn't treated as final.

Is formal approval the same as unconditional approval?

Not always. Some lenders call conditional approval "formal approval" because the application has been fully assessed. Unconditional approval is when every condition has been met. Check the wording on your letter.

Do I need unconditional approval before my finance clause ends?

Generally, yes. That's what tells you the lender will fund the purchase. If it won't arrive in time, speak to your solicitor or conveyancer about asking the seller for an extension before the deadline passes.

General information only. It does not take your objectives, financial situation or needs into account, and it is not credit or financial advice. Lender policy, rates and eligibility change regularly and vary between lenders — talk to us about your own circumstances before acting on anything here.