Did you just get pre-approved for a home loan? Congratulations!
You’re now able to go out and look for a property with the secure finance you need to buy quickly and leave first home buyers without a pre-approval in your dust!
You’ve successfully crossed the first hurdle in your journey to buying a property but there’s still a few things you need to do before the keys to your dream house are handed over to you.
So what steps are left to reach settlement after your mortgage is pre-approved?
Get a proper valuation done
Once you’ve found a property that you have your heart set on, organise to have a ‘valuation’ undertaken.
A property valuer will inspect the property and let you know what the property is worth.
The value of the property that is determined by the valuer will be included in the contract of sale and it’s evidence to the lender that you’re planning to buy a home that meets their conditions. The bank will see the valuer’s report and decide to move your application to the formal approval phase.
You can actually order up front valuations with some lenders and, thanks to special relationships that we have, some of them won’t even charge you for it.
Getting an upfront approval speeds up the application process and allows you to jump directly to formal approval.
Get formal approval
‘Formal approval’, also known as ‘unconditional approval’, is when your home loan application has been fully approved without any more conditions needing to be met.
Sometimes, a formal approval may be delayed because your situation is complex and the lender requires additional documents even after your mortgage broker submits your application.
If you’re borrowing more than 80% of the property value (Loan to Value Ratio), your mortgage will need to be approved by a mortgage insurer and you’ll need to pay an LMI (Lenders Mortgage Insurance premium. Getting the green light from the LMI provider can create even further delays.
What do you do with the loan offer?
About a week after you’re unconditionally approved, you’ll receive a loan contract from your lender that stipulates whether you agree with the terms of the mortgage, such as the amount that you’re borrowing, your interest rate and how your repayments are and the features and facilities that come with the mortgage.
It helps to confirm the details of the loan contract with your mortgage broker or, for independent legal advice, speak with a solicitor.
In some cases, you may need to submit a few extra supporting documents, such as evidence that you have insurance on the property, before the loan is advanced.
Once you’ve confirmed all of the details, it’s important that you sign and send the loan offer back to your mortgage broker or lender as quickly as possible in order to avoid delays in settlement.
You’ve reached settlement!
‘Settlement’ is when you become the owner of the property. You can set the settlement date by negotiating with the seller but it’s typically six weeks after putting down your deposit.
On settlement day, at an agreed time and place, your conveyancer meets with your lender and the seller’s representative to sign and hand over documents and cheques. Documents are then sent to the titles office to register you as the new owner.
This part of settlement is handled by your conveyancer – you don’t even need to attend the settlement meeting!
However, issues may sometimes arise when it comes to settlement, so you need to have the following things sorted beforehand:
- Confirm the date, time and venue for settlement.
- Confirm with your solicitor if he has paid off any extra fees that you may need to pay, such as council rates, property registration fees, water charges, or strata levies (strata levies apply to a strata property such as apartments or townhouses).
- Ensure that the cheque that you’ll be giving the lender the day before settlement has no spelling mistakes and is actually for the correct dollar amount. An error on your part may result in late settlement charges.
- You may have to pay your solicitor or conveyancer for their services before the date of settlement so you should confirm this with them prior to settlement.
- Inspect the property yourself one last time before settlement to ensure everything is in order.
- It’s recommended that you insure the property and its contents.
Once you’ve undertaken this little bit of due diligence, your conveyancer will notify the real estate agent to release your deposit to the vendor and you’ll officially own your new property.
Now you can open a bottle of champagne and get your party on!
Need someone to guide you through the home buying process?
Our mortgage brokers have many years of experience in the mortgage broking industry and have an excellent understanding of the steps of buying a home. For us, it’s not just about working to get your home loan approved but helping you to make informed decisions when purchasing a property, including recommending a conveyancer.
Give us a call on 1300 889 743 or fill in our free assessment form today.