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The Difference Between a Conditional vs Full Approval

Updated: Jan 31, 2020


Difference between Conditional Approval and Full Approval for Australian Mortgages

Just like every other industry, there's jargon that everyone uses freely that confuses just about anyone.


When applying for a mortgage loan from Australia it's common to hear the term "Conditional Approval" and "Unconditional Approval" frequently. Especially when inquiring about your mortgage options as a foreign investor.


The big question that needs to be answered: What's the difference between "Conditional Approval" and "Unconditional Approval"?


What is Unconditional Approval?

To start, Unconditional Approval means your mortgage application with the licensed lender is fully successful and you do not need to fulfil any further credit requirements. Unconditional Approval is also referred to as Formal/Full Approval.


Once you have received your Unconditional Approval, you would normally wait for the Lender's solicitors to prepare your Loan Documents (Mortgage Contracts) for you to sign and complete your application for a loan.


What is a Conditional Approval?

On the other hand, Conditional Approval means your mortgage application has been pre-approved pending conditions. Conditions typically include updated documents, valuation, compliance checks, etc.


Can I use my Conditional Approval to purchase a home?

Usually, you are able to do this please check with your broker as different lenders have different policies.


Can my application for Conditional Approval be rejected?

Yes, it is possible for your application to be rejected. Common reasons include:

  • The mortgage underwriter is unable to verify the information provided by the client

  • The home the client is trying to purchase has an unexpected lien

  • The client has a judgment on their record

  • The client had negative entries on their credit report


Your mortgage application may also be denied if any of the additional information you submit is not consistent with what the lender was given at the time of initial mortgage approval. Also, if you have a loss of income or buy a new significant purchase (car, another home, etc.) at the same time you’re trying to get your mortgage.


Conclusion

Applying for a mortgage from Australia is easy and straightforward when planned, and carefully carried out. If you choose to go it on your own consider the various factors which may affect you when applying for a mortgage (factors such as the timing of settlement, available cash flow, upcoming changes and future commitments).

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