Purchasing a property should be a really exciting time for families looking to put down new routes but applying for a home loan can feel daunting if you’re unfamiliar with the process.
With a little preparation and support from the experts, the process can be smooth and straightforward.
To help you prepare, here’s a step-by-step guide of the most common steps you’ll go through when applying for a home loan.
Step 1: Appointment
The first contact you will likely have in the home loan process is with a mortgage broker or lender, who will seek to better understand your financial goals and requirements for a loan.
Prior to your initial appointment, your mortgage broker or lender will send you a checklist of documentation they require to assess the market for the most suitable loan for you. This will help them calculate your borrowing capacity, work out repayments and answer any questions you may have during your appointment.
First appointments can be made in many ways these days. In an office, at a mutually convenient location, or even virtually through video conferencing software like Teams or Zoom.
Step 2: Preliminary assessment
Once your broker or lender has assessed your financial position based on the information supplied, they can help you choose the most suitable loan for your circumstances. They’ll also prepare your compliance and application forms to review and sign before lodging the home loan application on your behalf.
Step 3: Submission
Once signed forms have been returned, the application is ready for submission to the lender for credit assessment and a decision. The service level agreements vary between lenders, so it is important your broker be transparent on what this is to help manage expectations and keep you informed as you progress through the application journey.
Step 4: Approval
If your application has been successful, the chosen lender will issue a ‘Conditional Approval’ while they organise a bank valuation and advise of any outstanding conditions that need to be met before final approval is issued. During this stage, the lender will also conduct a credit check. When all conditions have been satisfied, your loan will reach the final stage of being ‘Unconditionally Approved’.
Step 5: Loan offer
At this stage of the process, it’s time to pop the bubbly because your loan has been formally approved. All the hard leg work has been done and the bank is happy to lend you the money you need.
It’s a good idea to book an appointment with your broker or lender at this stage. The paperwork can feel overwhelming, as there is a fair bit of information to go through and documents to execute correctly and be witnessed by an authorised person.
Your broker or lender can go through the documents with you, explaining and assisting with bank jargon or any new or refreshed queries that come up. They can also help ensure the loan documents are completed correctly, so that you’re not asked to re-sign, which could delay settlement.
By this stage, it’s also usually a condition of your home loan that building insurance is in place, with the lender noted as the interested mortgagee/party.
Step 5: Settlement
As settlement is the official process of transferring property ownership (if purchasing a property) or registration of a new mortgage (if refinancing from one lender to another), this is the final leg of the process!
Once settlement has been arranged (booked), your broker or lender will let you know of completion and ask that you check your accounts online to ensure all accounts are in order.
Step 6: Home Loan Completion
Now that your loan has settled, your broker or lender should check in with you after four to six weeks. By this time, you probably would have made your first repayment and received any further material from the lender, such as debit cards or credit cards if they were part of your package.
A good broker will also conduct regular home loan checks to help ensure your loan remains the most appropriate one for you. If you’d like to find out more, get in touch with the Lending and Finance team at findex.com.au.
While all reasonable care is taken in the preparation of the material in this document, to the extent allowed by legislation, Findex Lending Services Pty Ltd ABN 93 107 847 692 ACL No. 39214 accept no liability whatsoever for reliance on it. All opinions, conclusions, forecasts or recommendations are reasonably held at the time of compilation but are subject to change without notice. Findex Lending Services assumes no obligation to update this material after it has been issued. You should seek professional advice before acting on any material.
Date: 12 July 2021