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A Guide to Your Home Loan Application Process

HomeInformation Centre
discussing loan with your brojker
Lending
By
John Liston
John Liston
Director | Adviser
January 22, 2020
6
minute read

Applying for a home loan is a detailed process, so it’s crucial that you have the right support

When it comes to support with your home loan, using the services of a mortgage broker will be invaluable.

Mortgage brokers can do a wide variety of things:

  • They have access to a wide range of major banks and lenders.
  • They can help you find the best interest rates.
  • They can help you with difficult loans when some lenders say no.

Also, in the majority of cases, the services of a mortgage broker are free— so make sure you confirm this in advance.

Your broker will take the time to understand your situation to determine the best loan product for you, and how best to structure it for your circumstances.

Here’s how your Liston Newton mortgage broker will guide you through your home loan application process.

With Liston Newton Advisory as your broker, you get the distinct advantage that we already know your personal business finances. We save you time, save you money, and can incorporate tax and investment advice into the process to provide you with the best possible outcome. For any mortgage advice, get in contact with us today.

Meet your broker

working with a home loan broker

The best place to start is to meet with a broker to discuss you situation. They’ll determine why you’re seeking finance, and get a better understanding of your needs and objectives.

Once they understand you, they can analyse the type of home loan that suits you best. They can also help to quickly determine your eligibility for a loan, so you know where you stand, right from the start.

Preliminary assessment

If you’re eligible for a loan, we progress to preliminary assessment stage. This is where we prepare your application, and gather supporting documents and identification requirements for the lender.

Here is where your broker does the bulk of their detailed research and background work. This is to determine your borrowing power (that is, how much you can actually borrow), and to identify which lender is most appropriate for you.

Discuss findings and agree on a loan

discussing home loans

Once the preliminary assessment is complete, your broker will prepare a preliminary assessment document that details their findings and provides at least three different loan options.

This is the time for you to ask any questions you might have, and agree on what loan and product is most suitable to you.

You can discuss:

  • Fixed or variable loans
  • Whether you need an offset account or not
  • If you wish to pay principle and interest, or interest only
  • If you wish to apply for a credit card or consolidate any other loans

Once everything is agreed, you will be provided a Credit Proposal Disclosure document to sign. This has all the details of the interest rates, loan features, and any associated fees.

Submit your application

Once all your documents are signed, collected, and the application is prepared, we then submit everything to lender. Again, this is where a mortgage broker adds value to the process.

Your broker is able to talk directly with the credit team that assess the loan, and explain any issues that the lender's credit team may find. For example, there may be missed loan payments, or late fees that raise red flags with the lender. Or you may have a complicated structure in which there are business entities and income from various sources.

This is where your broker does the hard work behind the scenes, to ensure you get the best outcome.

Conditional approval

Provided all the lender’s requirements have been met, you will then be issued with conditional approval, also known as a ‘preapproval’. This means you have met most of the lender’s conditions, but there are still a few outstanding requirements .

For example, they may require a verification of your employment, or a valuation of the property you’re currently financing .

Your preapproval period lasts for approximately 90 days, which gives you enough time to find a suitable property (if you’re looking to purchase).

Valuation

A lender will then want to conduct a valuation on your chosen property. This may be the property that you purchased, or if you're refinancing, the property that the loan is secured against.

To ensure everything is completely objective, your property’s valuation is done by an independent company, not by the lender.

It’s not uncommon that valuations can sometimes delay the loan process, particularly if the valuation company can’t gain easy access to the property.

In order to speed up the process, some lenders will allow your broker to order an upfront valuation, which means the valuation is done prior to lodgement.

Unconditional approval

Your lender will then issue unconditional approval once they have all the required documents and supporting information. They will send you a letter which confirms full approval and a formal offer for a loan.

This is when you can finally relax — your approval is complete.

Documents issued

loan documents

Soon after the loan is approved the lender will issue the necessary documents and the loan contract.

Your contract has the in-depth details of the loan, your fees, and all the conditions that form part of the credit contract. It’s not a small document, either; usually these documents are between 40 to 80 pages long. It’s a good idea to go through the contract with your solicitor to make sure you fully understand what you’re signing and all the commitments you’re signing up to.

Once you’re comfortable, the loan documents can be signed and sent back to your lender.

Settlement

When the lender receives all your documents they will organise a settlement date with your conveyancer or solicitor. These days, the majority of settlements are done online through a new system called PEXA.

You will need your solicitor or conveyancer fully-informed at this time, so that they can deal with the lender’s solicitors and ensure there are no obstacles to settling your loan.

Once the settlement occurs, the money is transferred, and your loan begins.

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