The real estate market is constantly booming. Every year, thousands of Australians submit their applications to the lenders. But many of them are not aware that the home loan application process can be very long, tiring, and complex. There are so many steps involved, which makes it harder for people to even know where to begin. This is why it is important to understand the home loan process, so you can manage it efficiently.
The first step in the home loan application process is doing an eligibility assessment. Hunter Galloway will set up a meeting and assess your current financial situation to find out if you meet the eligibility criteria. We will also discuss your objectives and requirements to find out the best solution for you.
If you meet the eligibility criteria and wish to continue, you’ll then fill out an application form and submit it along with the bank statement, pay slips, and ID. Providing a complete set of documents will speed up the application process.
You are required to provide a following list of documents during the application process:
- Identity documents
- Salary Slip
- Bank account statement
- Expenses and liabilities account
- Documents containing asset details, and
- Contract of sale
The next step is the preliminary assessment. Under this step, a detailed evaluation is done to identify any issues from a lender’s perspective. The borrowing capacity of an applicant is also calculated. After the mortgage broker figures out everything, we will try to find a lender who can offer the best loan packages at the lowest interest rate. This gives you an option to choose the right package for you.
Choosing the Product
After selecting your desired product, the next step in the home loan application process is to provide the final set of documents and sign a privacy form. The application is uploaded by your broker onto the lender’s database, highlighting the main points and presenting it in such a way that the lender can assess it. Once the broker collects all the documents, they are emailed to the lender.
Home Loan Application Process
The following are the main steps in the home loan application process:
Pre-approval and Conditional Approval
Pre-approval is not a complete approval in principle. Once the lender receives your application and supporting documents, they’ll evaluate it to confirm if it is in line with their policy. The approval of an application depends on certain conditions; for example, a bank might accept a property as security against the loan.
Our mortgage brokers can also help you get a pre-approval on your loan if you haven’t finalised any property yet. It’s valid for 90 days, and you can get an extension by providing certain documents like salary slip, etc.
In some cases, applicants purchase a property before getting a pre-approval. They sign the agreement of purchase and then apply for a loan. But it’s a risky move as you may end up losing your initial deposit paid to buy a property if you are unable to get a loan.
This is another step in the home loan application process. After you finalise the property, it is valued by an independent valuer. Since they are not hired by lenders, property valuation might take a while. If you are a low-risk applicant, it is likely that you won’t have to get the valuation done.
Lenders give a formal approval once they are satisfied that you qualify for it. If you have over 80 percent LVR, you might have to apply for lender’s mortgage insurance, which might further delay the final approval. However, please note that you should get approval before the cooling off period ends.
The funds are issued by a lender once all the documents are certified. They make a call to your solicitor, telling them about the availability of loan funds and the solicitor books a date and settlement time.
In case of refinancing, your current and new lender will make an arrangement, wherein, your current bank repays the loan to the new one and takes possession of the certificate of title. Settlement happens only after the loan funds are given.
There are so many parties involved in the home loan application process, including a mortgage broker, insurers or lender’s mortgage insurance provider, tenants, real estate agents, vendor, conveyancer or solicitor, inspection officers, and valuers.
At Hunter Galloway we provide ongoing support to our customers long after the settlement of a loan. We will monitor the value of the borrower’s property, discuss any issues faced by a borrower, provide guidance to fix the loan rate or switch to a different loan product, review the interest rates, and also help in changing the frequency of repayments. Speak to our team today about your options.