Conditional vs. Unconditional Home Loan Approval – The Difference Explained!

What Is The Difference Between Conditional and Unconditional Home Loans

Many home buyers usually assume that they have a formal home loan approval when, in fact, they haven’t been granted any. The risk that presents itself here is that you can make an unconditional offer in order to buy a property and then later discover that you haven’t been approved a home loan.

This is why you should always remember that your loan can’t be formally approved until the lender you worked with formally examines your deposit, Contract of Sale (if applicable) your written evidence of outgoings and income, as well as your personal ID.

You should do your best to know and understand the difference between conditional and unconditional home loan approval to avoid any confusion.

Conditional Home Loan Approval

This type of home loan approval means that, in theory, your loan has been assessed and then approved by your lender. However, the lender will still need more information from you before they can grant you with unconditional – also referred to as ‘formal approval’.

The lender may require information such as a valuation of the property that you are about to buy, more recent payslips, or a dated and fully signed sale contract.

On the other hand, keep in mind that the bank may also come with requirements that you have to meet before they formally approve your home loan.

In short, a conditional home loan approval means that your loan has been approved but there are still some conditions that you have to meet before celebrating.

Unconditional Home Loan Approval

By definition, unconditional approval means that there are no conditions that you have to meet for your loan to be approved. Obviously, unconditional home loan approval is what you should be looking for to make sure that you are very, very close to purchasing and owning a new home.

Your lender will send you a confirmation letter saying that your loan is now formally approved. This means that they have formally assessed your paperwork and have signed your loan application.

In short, they have decided to proceed with your home loan and are happy with their assessment.


You must not forget about timeframes. Conditional and unconditional approvals don’t last forever. They usually come with a timeframe of three up to six months. However, even then, nothing is certain until the settlement itself.

Your lender may still cancel the deal if your financial situation has changed in such a way that you are no longer able to afford a home loan.

The Bottom Line

Now you shouldn’t have any more questions about conditional or unconditional home loan approvals! It’s simple – the first means that you still have some things left to do, while the latter means that you are on the brink of purchasing a new home.

However, if you still have any questions – related to approvals or home loans in general – you can always get in touch with us. We will provide you with the information you need and, if you need any more help, we can also guide you through the process of finding a favourable lender for your needs.

Don’t hesitate – reach out and contact us today! Contact us on on 02 9121 6247 or submit your scenario online.

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Whether you’re a first home buyer looking at entering the market or an existing home owner looking at ways to save money on your home loan, we have you covered. We’ve put hundreds of hours of research into these guides to ensure you end up ahead, and it’s completely on the house.

So, why use Highline Lending for your home loan?

We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position

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With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution