Home loan application process explained
Are you planning to purchase your first home or investment property?
It’s an exciting time and nothing compares to the feeling of holding the keys to your very own property in your hand.
If you’re new to buying property, here’s how the home loan application process works.
Understand your borrowing power
When it comes to buying a home or investment property, the first step is to get a clear picture of your borrowing power and budget.
How much can you afford to spend on the property? What repayments can you reasonably cover?
Having a budget in mind will help you narrow down your property search and avoid overspending. Touch base with us for some preliminary insight into your borrowing capacity.
Choose a lender
Next, it’s time to see what loans are available and get a feel for the different lenders. The easiest way to do this is to have us compare the market for you.
We’ll get to know your financial situation and goals before recommending a suitable home loan.
Once you’ve decided on a lender, we’ll get the ball rolling with pre-approval on your finance.
This is when a lender agrees, in principle, to lend you a certain amount of money. It’s also referred to as ‘approval in principle’ or ‘conditional approval’.
You’ll still need full approval down the track, but getting pre-approved allows you to bid or make an offer on a property with confidence.
Gather the necessary documentation
You’ll need to supply a range of documentation to support your pre-approval application.
Requirements can differ from lender to lender, but generally speaking, they’ll typically want to check your:
- Proof of identity
- Proof of income and employment
- Credit score
- Deposit and savings history
- Assets and liabilities.
We can walk you through the paperwork and ensure nothing is missed.
Review the pre-approval offer
If the lender decides you’re a suitable candidate for a loan, they will issue you with a pre-approval letter.
Remember that pre-approvals are not a definite guarantee that you’ll get a home loan. You’ll still need to meet the conditions stipulated by the lender.
Pre-approval shouldn’t cost anything. There’s also no obligation to take out a full home loan with that lender.
Typically, pre-approvals are valid for three months.
Find a property and make an offer
After pre-approval comes the fun part – house hunting. Once the right property comes along, it’s time to make an offer.
You’ll need to decide at this point whether to stick with the lender that gave you pre-approval or shop around for another home loan.
Complete a full mortgage application
The final step is to complete the full home loan application for unconditional approval.
If you decide to go through the same lender that gave you pre-approval, most of the documentation will probably have already been completed. We’ll walk you through any other requirements needed.
As part of your application, your lender will likely get an independent valuation of the property. This helps them determine the risk involved in lending you the money.
If all goes well and your mortgage application is approved, the lender will send you an unconditional loan approval letter. It’s a good idea to have your solicitor or conveyancer review everything to make sure it’s in order before you sign the loan documents.
Finally, it’s time for settlement. At this point, the lender will certify that your documents are in order and advance the home loan.
Your legal and financial representatives will meet with the seller’s representatives to swap documents and lodge the transfer of title. Stamp duty is usually paid at the same time as settlement.
Then the property is all yours!
Ready to buy?
As a first-time buyer, getting your head around the home loan application process can be daunting. That’s where we come in.
Mortgage brokers may take the stress out of applying for a home loan. We have access to a wide range of lenders and understand which home loans might work for your specific financial circumstances and goals.
Let’s chat about your property purchasing plans. Get in touch today.