EXPLAINED: The home loan application process.

Are you planning to purchase your first home or investment property?

If you’re new to buying property, here’s how the home loan application process works.

Understand your borrowing power

When it comes to buying a home or investment property, the first step is to get a clear picture of your borrowing power and budget.

How much can you afford to spend on the property? What repayments can you reasonably cover?

Having a budget in mind will help you narrow down your property search and avoid overspending. Touch base with us for some preliminary insights into your borrowing capacity.

Get pre-approved

Let’s get the ball rolling with pre-approval on your finance.

This is when a lender agrees, in principle, to lend you a certain amount of money. It’s also referred to as ‘approval in principle’ or ‘conditional approval’.

You’ll still need full approval down the track, but getting pre-approved allows you to bid or make an offer on a property with confidence.

Gather the necessary documentation

You’ll need to supply a range of documentation to support your pre-approval application.

Requirements can differ from lender to lender, but generally speaking, they’ll typically want to check your:

• Proof of identity
• Proof of income and employment
• Credit score
• Deposit and savings history
• Expenses
• Assets and liabilities.

We can walk you through the paperwork and ensure nothing is missed.

Review the pre-approval offer

If the lender decides you’re a suitable candidate for a loan, they will issue you with a pre-approval letter.

Remember that pre-approvals are not a definite guarantee that you’ll get a home loan. You’ll still need to meet the conditions stipulated by the lender.

Pre-approval shouldn’t cost anything. There’s also no obligation to take out a full home loan with that lender.

Typically, pre-approvals are valid for three months.

Find a property and make an offer

After pre-approval comes the fun part – house hunting. Once the right property comes along, it’s time to make an offer.

Complete a full mortgage application

The final step is to complete the full home loan application for unconditional approval.

As part of your application, your lender will likely get an independent valuation of the property. This helps them determine the risk involved in lending you the money.

If all goes well and your mortgage application is approved, the lender will send you an unconditional loan approval letter. It’s a good idea to have your solicitor or conveyancer review everything to make sure it’s in order before you sign the loan documents.

Settlement

Finally, it’s time for settlement. At this point, the lender will certify that your documents are in order and advance the home loan.

Your legal and financial representatives will meet with the seller’s representatives to swap documents and lodge the transfer of title. Stamp duty is usually paid at the same time as settlement.

Then the property is all yours!

Ready to buy?

FinancePath can take the stress out of applying for a home loan. We have access to a range of lending solutions suitable for your specific financial circumstances and goals.

Let’s chat. Call 1300 780 440.