Standard Home Loan Approval Period
Buying a property can be a life-changing experience, but applying for a home loan to secure that property can be daunting if you’re new to the process.
Getting a home loan takes about 4-6 weeks, from application submission to settlement. This, of course, could vary depending on the complexity of your loan or the type of lender you are applying with.
To ensure your home loan gets approved without delays, you must first make yourself aware of the various phases in the home loan application process. Then, you can look into what you can do to speed up the process.
How Long Does It Take To Get Home Loan Approval?
|Application Process||How Many Days Does It Take|
|Pre-approval||1-3 business days|
|Application||4-7 business days|
|Property Valuation||5-7 business days|
|LMI (if applicable)||1-2 business days|
|Unconditional approval and settlement||4-6 weeks|
Please note that this is a general guideline. Lenders can take more or less time, based on the complexity of the application and the information required.
Steps In Home Loan Application Process
1. Filing An Application
The first step is to file an application for your home loan with a lender of your choice. Whether you’re a single applicant or applying with someone else, it typically takes about 1-2 hours to fill out an application form. If you apply with a lender through a mortgage broker, the process can be quicker and easier.
Depending on the complexity of your loan, the turnover time for your application will be either 1-3 days or 4-7 days.
A 3-day turnaround time is applicable for employed individuals who can provide at least two payslips and a group certificate to prove their income.
The lender has to be convinced that your debt-to-income ratio is not too high and that you can afford the loan amount. After the credit department processes your application, the lender may either come back with approval or decline your application, in 3 days.
The more complex your situation or the higher the risk associated with your mortgage application, the longer the lenders will take to process your application. A 7-day turnaround period is reserved for complex situations, and this turnover period can extend depending on your case.
Generally speaking, this applies to the following situations:
- Borrowing more than 80% of the property value, which is seen as higher risk so the lender will have to apply for Lenders Mortgage Insurance (LMI), adding more time to the pre-approval process.
- Borrowing more than $2 million.
- Borrowing with a guarantor.
- Buying an unusual property, such as a house located in a rural or regional location.
- Unusual employment, such as contract work or if you’ve just started a new job.
- Borrowing through a trust, company or self-managed superannuation fund (SMSF).
- You’re a non-resident who is either living overseas or living in Australia on a Temporary Working Visa.
- Our mortgage brokers have direct access to a lender’s business development manager. For complex cases that take longer, apply through one of our brokers to reduce the turnaround time to 5 days or even 3 days.
2. Getting A Pre-approval
As someone looking to get a home loan as soon as possible, you should go for a pre-approval. A pre-approval gives you the confidence to go looking for a property mid-application. Knowing how much loan you have been approved for helps you set a budget.
But you must be aware of time constraints. You must find a property within 90 days of the issuance of pre-approval or it will expire. If you want to settle your home loan within a month, then you have about 10 to 12 days from applying for the home loan to find a property.
3. Applying For Valuation
Once you find a property, you must apply for a valuation with the lender.
If you’re borrowing at 80%, some lenders will just go off the contract of sale and give you a formal approval.
Some will conduct a kerbside valuation, just to confirm that there is a property located at the address provided.
In this case, you could potentially hear back from the bank with your formal approval the next day.
If a full valuation is required, it could take as long as 5-7 business days, depending on how quickly the vendor or real-estate agent allows access to the property.
4. Getting A Formal Approval To Settlement
Once a valuation has been undertaken and you’ve been formally approved, you can sign the contract of sale, with help from your conveyancer.
At this stage, you should negotiate the settlement date.
The time between getting formal approval and signing the contract of sale will come down to how organised you and the vendor are. Typically, the vendor’s conveyancer will send the contract of sale to your conveyancer and you’ll then organise a date to have a meeting to discuss the terms. Expect this to take 1-2 days so you’re not rushing into the sale.
Meanwhile, the bank will prepare the loan offer documents for you to sign.
This can take anywhere from 2-7 days! During this time, the lender may ask for additional or updated documents, so be prepared.
It’s important to sign and return the loan contract as soon as possible.
You can find more useful information about buying a property on the Home Buying Process page.
What Is Conditional Vs Unconditional Approval?
Pre-approval and conditional approval are similar but not exactly the same.
A pre-approval means a lender is willing to let you borrow the money but you need to find a suitable property. If the property is not accepted by the lender, you will not be approved for the mortgage.
A conditional approval means there are some conditions the borrower needs you to meet before the lender is confident to move your application forward. For example, the borrower might need to close out a credit card or work more hours to get approved.
An unconditional approval is a formal approval. As the name implies, there are no conditions you need to meet. The lender is ready to move your application forward to settlement.
You can visit our page on conditional vs unconditional home loan approval for more information.
How Can I Speed Up The Home Loan Approval Process?
Below are steps you can take to speed up your home loan process, so you get a fast home loan approval.
Apply With The Right Lender
Some lenders over-promise and under-deliver when it comes to turnaround times.
A bank trying to win over a customer has a strong incentive to guarantee approval before a certain date, even if it is unrealistic. This is particularly true for low-cost lenders or banks that are advertising an interest rate that is way below the rest of the market.
We can find the right lender for you from our extensive panel, so you don’t get stuck with a bad one.
Avoid Getting Missing Information Requests
Around 80% of home loan approval delays result from missing documents.
By providing up-to-date mortgage documents with your application, all in one go, you can drastically reduce the time taken to reach home loan approval.
The most important documents to be sent include:
- A completed fact find or short application form.
- A scanned copy of your driver’s licence, passport or Medicare card (whichever is applicable).
- Your two most recent payslips, or your last two years personal tax returns and financial statements if you are self-employed.
- A copy of the contract of sale (you need to provide the first couple of pages in most states).
- Read each mortgage document carefully. Provide all the documents that the bank asks for the first time around.
- Make sure the supporting documents are up to date.
- Sign the mortgage documents and return them as soon as you’ve agreed to the terms.
- Notify the vendor or real-estate agent and tell them whether they need to allow access to the property for a valuation.
Work With A Broker Receiving Lender’s Priority Service
Mortgage brokers meeting certain quality benchmarks with specific lenders get priority service; their clients’ applications have faster turnaround times and shorter time to settlement.
Home Loan Experts’ mortgage brokers have priority service with selected lenders, including the major banks. This allows us to get our clients fast home loan approvals.
4 Tips For Quicker Settlement
Below are some additional measures you can take to reach settlement quicker.
Connect With a Mortgage Broker
We at Home Loan Experts successfully settle hundreds of loans with some of Australia’s largest banks and lenders every month. We can get your home loan approved faster than the standard turnaround time.
Call us on 1300 889 743 or complete our free online assessment form and discover how we can get your mortgage application approved faster and get you into your new property hassle-free.