The home loan application process can be long and complicated.
With so many steps involved, people often don’t know where to start when applying for a mortgage.
Furthermore, things have gotten a bit complicated due to the coronavirus pandemic. However, we’ve created this useful page on how you can apply for a mortgage amidst the pandemic.
Preparing for your mortgage application
Speak with a mortgage broker
To discover your eligibility for a home loan, the best place to start is to speak with a mortgage broker.
There are many benefits to using a mortgage broker:
- In most cases, the services of a broker are free.
- They have access to a wide range of major banks and lenders, and specialist lenders, which can be helpful if you do not quite fit into standard policies.
- You will get a fast and easy approval compared to going to the bank directly because the broker will handle the application process from start to finish.
- Mortgage brokers have strong negotiating power to get tough loans approved and to negotiate sharp interest rate discounts on your behalf.
This is the first contact you will have with your mortgage broker.
We use this stage to discuss your situation, your needs and objectives behind getting a home loan.
At the end of this discussion, we will determine if you’re eligibility for a home loan.
It’s also your opportunity to agree to use us as your broker.
Returning your application and documents
Once you have agreed to use us as your broker, we will ask you to complete our short application form (SAF).
We will also require supporting documents such as your ID, pay slips and bank statements.
By giving us all supporting documents in one go, it allows us to give you a quick and accurate assessment.
Use the home loan application documents checklist to make it simple and easy.
After we have your application and supporting documents, we’re able to complete a preliminary assessment of your situation.
The preliminary assessment is a very detailed process where we identify any possible problems from a lending point of view.
We will also calculate your borrowing capacity or borrowing power.
Our brokers will then assess which lenders can assist and compare the most suitable loans at the lowest interest rates.
After the preliminary assessment, the broker will present two or three loan recommendations for you to choose from.
Submit to a lender
Once you have chosen the most suitable loan for you, we’ll then prepare to submit your application to the lender.
We will ask you to provide any final documents and to sign the lender’s privacy form.
While we wait for these documents, we prepare your application and upload it into the lender’s system or application portal.
We highlight the strengths of your application and present it so it suits the way that the particular lender will assess the loan.
Once we have everything we need, we click submit on the lender’s system and email your supporting documents to the lender.
Conditional approval or pre-approval
Home loan pre-approval, also know as conditional approval or in-principle approval, is not a full approval.
At this stage, you have met most of the bank’s lending policies subject to a few conditions.
Typically, it means that you are yet to find a property which means your home loan is approved subject to a property valuation.
As long as the property meets the lender’s guidelines, they are likely to approve your home loan application. You can read more about property types that are acceptable to lenders and others that can be difficult to get approved.
The good news is that a pre-approval lasts about 3 months, which is usually enough time to find a suitable property.
Usually, you can extend your pre-approval if needed by providing a new set of payslips.
We often receive enquiries from customers who sign the Contract of Sale and pay their deposit before getting pre-approved.
This can be risky! If you can’t get formal approval, you risk losing your deposit.
Once you have chosen your desired property, a valuer will make an appointment to inspect the property.
The bank does not employ property valuers – they are separate companies which means their valuations are independent.
It also means the timelines for completing a valuation can vary.
In some cases, tenants can delay the valuer from gaining access to the property.
For very low risk applications, a valuer may not be required.
We can order upfront valuations with many of our lenders, which enables the bank to skip the first two steps and go straight to formal approval.
Unconditional approval or formal approval
Unconditional approval, also known as formal approval, is when the lender has everything they need and can confirm that they are willing to approve your loan.
They will issue a letter confirming their approval so, at this stage, you can relax.
There may sometimes be some back and forth with the bank asking for additional documents before they can finalise approval.
This is normal for complex applications or where you haven’t provided everything that the lender needs upfront.
If you’re borrowing over 80% of the property value, you may need Lenders Mortgage Insurance (LMI) approval as well.
In some cases, this will mean that your application will take longer to reach unconditional approval.
Loan offer issued
Once the loan has been formally approved, the lender will send you a loan contract for you to sign to accept their offer.
You can go through this contract with your solicitor if you’d like to receive independent legal advice.
Once you’ve signed the contract, return it to the lender with any requirements that they need to settle the loan.
Do this as soon as possible to avoid delays at settlement!
Once the lender has certified that all of your documents are in order, they can then advance the loan funds.
For a purchase, they will call your solicitor or conveyancer and let them know that the funds are available.
Your conveyancer will book in a settlement time and date with the lender.
For a home loan refinance, your new lender will arrange with your current lender to repay their loan and take possession of your mortgage title.
They will book in a time to meet and sort this out automatically.
Settlement has occurred when the loan is advanced and your bank or broker will notify you as soon as the lender informs us.
After the mortgage is set up
Did you know that we have a customer care team dedicated to looking after you even after your home loan has been settled?
Two weeks after settlement
After your loan is set up, we’ll contact you a couple of times after settlement to make sure that you understand the loan features and how to make repayments.
We’ll also ask for a copy of the settlement letter to make sure that the lender has not overcharged you.
We call our customers annually on the anniversary of their settlement to check that they haven’t had any problems and review their home loan.
We provide ongoing service to our customers long after they have settled their loan including:
- Reviewing your interest rate.
- Switching loan products.
- Helping you make an educated decision on fixing your interest rate or staying variable.
- Monitoring the value of your property so you can make better decisions about accessing equity to buy an investment property or moving house.
- Switching the date and frequency of your repayments so it better suits your financial needs and commitments.
How long does a loan application take?
The time that a loan application can take will vary significantly as some borrowers will have more complex applications than others.
Lenders who offer a lower interest rate are often slower as they receive more applications.
Other lenders are completely incompetent!
We’ll warn you if any of the lenders we’re recommending are known to have poor service levels.
To give you some idea, it usually takes a customer 48 hours to send their documents to us.
It will then take 24 hours for us to confirm our recommendation.
When the lender receives the loan, it can take anywhere from four hours to two weeks for them to complete conditional approval.
The valuation can take from two days to one week.
Formal approval can take from one day to one week.
The best way to find out is to call us to confirm the time required.
As a general rule, if you’re buying a property allow a two-week cooling off period or finance clause to give us ample time to obtain an approval.
What documents will I need?
Throughout the application process, you’ll be notified of a list of documents that you’ll be required to supply.
These documents will include the following:
- Payslips: These must be recent and when multiple payslips are required, they must be consecutive. They should clearly show employer name, your name and salary.
- Account statements: These must show account numbers, balance, limit and transactions for the period specified.
- Liabilities and Expenses documentation: Includes statements for car loans, other mortgages or credit cards.
- Asset documents: These documents can include banks statements or rates notices to show your savings record.
- Contract of Sale: Send through the details of the property you wish to buy and the signature pages. There’s no need to send through the entire contract.
- Certified Identity Documents: This must show the certifier’s details, document number and date of issue. If you’re a non-resident or Australian expat then Australian consular staff are usually the best option for your IDs to get certified. Check the lenders requirements closely.
- If your name has changed due to marriage or divorce, please provide a marriage certificate or other verifications. Statutory declarations will suffice.
Who’s involved in the application process?
There are many parties involved in the application process, including:
- Building and pest inspectors.
- Solicitors or conveyancers.
- Real estate agents.
- LMI providers and insurers.
- Your mortgage broker.
Download after pre-approval checklist
The first step
To begin the application process and get your home loan approved, give us a call on 1300 889 743 or enquire online.
One of our mortgage brokers will give you a call and get the loan application process started.