Get formal approval
Now it’s time to get in touch with your Mortgage Broker.
The steps in getting your loan formally approved include:
- ✅ Get the Contract of Sale to your Mortgage Broker – Let your Mortgage Broker know you have signed the contract of sale, how many days you have allowed for finance and when settlement is supposed to happen!
- ✅ Some documents might be needed – Depending if you have a pre-approval, and when it was approved your Mortgage Broker may need updated documents from you including payslips, or bank statements.
- ✅ A Proper Bank Valuation is Ordered – Now you’ve found a property that you have your heart set on, your mortgage broker will organise a bank valuation. A property valuer will inspect the property and let you know what the property is worth.
- ✅ Receive your Formal Approval (also referred to as unconditional approval) – ‘Formal approval’, also known as ‘unconditional approval’, is when your home loan application has been fully approved without any more conditions needing to be met and lets you know the bank is happy to give you the money towards your new home!
- ✅ Let your solicitor (or conveyancer) know its all good in the hood – Now your finance is approved (and assuming your building & pest report is fine) its time to let your solicitor know that you are happy to go unconditional on your contract and proceed with the purchase. They will formally notify the Real Estate agent and property sellers!
What happens if my home loan gets declined?
Don’t worry this happens sometimes. Did you know in 2018 over 40% of home loan applications were rejected by the banks?
You have 2 options when your home loan has been declined by a bank –
- Option 1: Speak with your Mortgage Broker about applying for another loan with another bank.
- Option 2: Provided you signed the contract of sale subject to finance, let your solicitor know you were unsuccessful with finance. They can terminate the contract and get your deposit refunded.
What Happens after the Formal Approval?
Once you get the formal home loan approval and sign the documents, the final step is the loan settlement. A lender would fix a date to transfer the property in your name, which usually takes a period of 30 days. However, the number of days varies from one case to another and it can also be negotiated by the new and current owner. After all the formalities are completed and the property is transferred to your name, you become the new owner.