Home loan processes can be lengthy and complex. With so much information to gather and heaps of mortgage documents to compile, aspiring homeowners often do not know what a home loan process is supposed to look like or even where to begin when starting to process loan application.
How does a home loan application work?
A home loan is used for buying homes and is usually secured against the property. The lender provides money to the borrower, who then pays back the amount borrowed plus interest over a period of time via monthly repayments. If the borrower defaults on his payments, the lender may take over the property.
A mortgage in Australia typically lasts for 30 years. The lenders will lend 80% of the value of the property as long as the borrower pays upfront 20% deposit. Otherwise, the borrower will have to pay the Lenders Mortgage Insurance which is a premium paid to protect the lender in case the borrower becomes unable to pay.
What a home loan application process looks like
Before you begin the home loan application process, the first thing you need to do is to talk to a mortgage broker Gold Coast who will work with you in getting the best home loan for your needs and advise you on how to get a home loan approved the quickest and most streamlined way possible.
The mortgage brokers at Professional Lending Solutions belong to a large network that supports each other. We aim to provide you with the most up-to-date lending solutions in the market.
Below are the conventional steps in home loan processing:
1. Gather your required documents.
Your trail of paperwork begins with the following:
- A completed and signed application form
- Proof of identification (e.g., drivers licence, passport, Medicare card, ATM cards)
- Proof of income (e.g., payslips, tax returns, or a Notice of Assessment for the self-employed)
- A bank statement as evidence of your savings and/or your house deposit
- Evidence of your current debt status (e.g., credit cards, personal loans, etc).
- Book a meeting with Professional Lending Solutions to discuss your goals and objectives
2. Shop around for home loan products from different lenders.
This is where you can really leverage the expertise and connections of your mortgage broker. Here, they will conduct a detailed evaluation to identify any potential issues with your application as well as your borrowing capacity.
They make sure you get the best deal possible, and often source 2-3 loan products that they deem most suitable for your personal financial situation.
3. Apply for conditional pre-approval.
Once you’ve determined your home loan product and bank of choice, you will apply for a conditional pre-approval. In this stage, your lender will gauge your financial position and what loan size they are willing to lend you. Your mortgage broker will submit your application for you.
4. Find a property to purchase.
So what happens after pre approval? After getting approved for a conditional pre-approval, you can now scout for property with confidence. It usually signals to a seller that you are serious about your intent to buy. If you would like some advice on a fair price for the property we have access to market data through RpData to give you historical information on the property and the surrounding area. Feel free to reach out.
5. Sign the contract of sale.
Once you have found that dream home, your conveyancer will obtain the Contract of Sale. You will then convene with the property’s seller and their conveyancer to discuss, negotiate, and possibly sign the contract. We also have trusted conveyancers, building and pest inspectors, whose contact details we can provide you.
6. Apply for unconditional approval.
Once you’ve found your dream home, we request a property valuation from your lender of choice. The lender will decide whether the property meets their lending criteria. After the property valuation, your lender will then move to a formal approval, A.K.A. unconditional approval, on your home loan request.
7. Prepare for the settlement process.
When all the parties have signed on the dotted line, the settlement process is well underway. It takes 4-6 weeks after the signing of contract. Settlement marks the completion of your home loan process steps. Your solicitor will take over from here, so you can relax and wait to hear from your mortgage broker to confirm the exact date of settlement.
After which, the house keys will be given to you. Congratulations on your new home!
Secrets from a Gold Coast broker: answering all the important questions around home loan process
What do banks look at when applying for a home loan?
They will look at your credit history, job, age, distance of the property from the bank, work experience, spouse’s income source (if it applies), repayment period, purpose of the loan, surplus income (if it applies), and relationship with the bank.
How far back do banks look for mortgage Australia?
They will review all your previous home loan applications, the extent of your credit report (every single transaction), closed credit card accounts, history of loans, recent purchases, employment history, and two months of recent bank statements. Your credit report will show all loan applications for the last 5 years and detail every loan repayment for the last two.
How long does it take to get unconditional approval?
Generally, it takes 3-15 business days. Any delays will have been caused by the need to provide more documents and the communication (or lack thereof) with the real estate agent and seller.
Loan declined after unconditional approval — is it over for me?
Not necessarily. Your mortgage broker will help investigate on the cause of your rejection and see if they can liaise further with the bank. If not, your mortgage broker can certainly help improve your chances of getting an approval on your next home loan application.