Table of Contents
Getting ready
It’s important to start preparing as soon as possible for your home loan application. This will give you the biggest chance of approval and will open you up to a broader range of lending options. The key steps are:
- Improving your credit rating: pay all of your debts on time (including loans, credit cards, rent and utilities), lower your credit limits, and limit unnecessary applications for credit.
- Saving to grow your deposit: As a general rule, the larger your deposit is, the lower the interest rate will be. It will also help to eliminate fees like LMI.
- Researching the types of home loans available: ask your mortgage broker questions to gather an understanding of the types of loans and features available. Relevant topics include variable and fixed rates, interest-only, construction, offset accounts, and redraw facilities.
- Exploring the option of pre-approval: A pre-approval provides you with an indication of the amount that a lender would be willing to lend you. It is especially valuable when looking to purchase at an auction.
- Finding your property: with the help of your broker’s market insights and valuation estimates, begin the often painstaking process of finding a property that meets your criteria.
Applying for your home loan
After gathering an understanding of your financial situation and discussing your needs and objectives, your broker will assess the thousands of home loan products available and present the options that best suit your needs. Once you have landed on your preferred product, the following will occur:
- Your broker will request supporting documentation in line with the chosen lender’s requirements. This generally includes proof of income, expenses, employment, identity and any existing debts.
- Your broker will complete the lender’s application form on your behalf and submit it to the lender together with all supporting documents.
- The lender will assess your application against their criteria, including the verification of all information that has been provided.
- The lender may request additional supporting documentation if required.
- If the application is successful in meeting all requirements, the lender will issue formal approval. The lender with issue loan documents for you to review and sign, effectively accepting their offer to lend you money.
Settlement
For property purchases, the contract of sale will specify the settlement date. This is the date that ownership will be transferred in exchange for the agreed purchase price.
In preparation for this day, your conveyancer will work together with the lender’s settlement agent, the seller’s solicitor and your broker to prepare and register the transfer of ownership and funds.
Post-Settlement
After settlement, your new lender will reach out to offer a welcome and set you up in line with your needs. Your repayments will then commence. Your broker will keep in touch, monitoring your situation and proactively reaching out when there is a better deal available.
