The Home Loan Process
So far in this First Home Buyers series we’ve talked about the various loan types, getting your finances in order and how to avoid some of the common mistakes in applying for a home loan.
In this article, we’ll discuss what’s involved in applying for a loan. We'll cover what you need to do, what your broker will do and the processes that your chosen lender will likely follow. Of course, each lender has their own policies and processes and every customer’s application is different so depending on your own circumstances and the lender you choose there may be some minor differences.
Regardless of your purchase scenario we at Portfolio Capital
highly recommend obtaining a pre-approval before
commencing your search in earnest.
Step 1 – Get your paperwork in order
Before approaching your broker or lender to lodge an application it’s important to make sure you have all the necessary paperwork handy. Typically, you’ll need to provide the following for each applicant:
- Your last two pay slips
- Your latest PAYG Payment Summary (delete your Tax File Number for these)
- If you are self-employed, you’ll usually need to provide your last two years’ tax returns and financial statements for the business and well as yourself
- Evidence of your available funds to complete the purchase and/or savings history of the past 6 months. Savings history can include the following although this list is not exhaustive:
- Savings account statements
- Share portfolio
- Term Deposits
- Managed Funds
- Advance payments on car and other loans (not all lenders)
- Rental history (not all lenders and conditions will apply. Talk to us about this one). This normally applies when you do not have a ‘traditional’ savings history but do have access to the funds necessary to cover your deposit and costs.
- Evidence of any gifted funds from ‘close relatives’. Depending on the lender this could be a Statutory Declaration or a letter confirming the gift
- Copies of your last credit card and other loan statements
- Your identification. Ideally, this will consist of your Driver Licence and Passport or Medicare Card although there are many other forms of acceptable ID. Your broker or lender will need to sight the original documents.
- Copy of contract of sale if you have already purchased
Step 2 – Make an appointment with your broker
Now that you have all your paperwork in order it’s time to start the process. This includes confirming your borrowing capacity and finding the loan that is best suited to your own individual circumstances – cost, features, available options etc.
During your appointment, your broker will review and verify your information and provide an accurate assessment of your borrowing capacity. They will also discuss your loan preferences as well as your plans and goals. Your views as to rate fluctuations will also help narrow down the lender and loan options that will best suit your profile.
During this assessment, the competitiveness of each lender will also be considered.
Our aim is to ensure that you are offered loans that are most suitable for you
at the most competitive prices
from sometimes hundreds of options.
Once you’ve chosen the appropriate loan and lender your broker will complete the lender’s application form with you and lodge this with the lender for approval. He/she will then liaise with the lender on your behalf and should keep you informed of progress throughout the entire process.
Remember, the broker is YOUR resource so don’t be afraid to ask questions and seek additional information at any time.
Step 3 – The lender approval process
Typically, your broker will lodge your application and provide the supporting documentation electronically. This provides significant time savings due to eliminating much of the double handling that once occurred throughout the process.
The following is a list of the events that will occur from the point of submission although the order will vary from lender to lender.
- An automated credit file enquiry is generated
- The application is vetted for any errors or omissions and if any additional information is required a request will be sent to your broker
- The file will be allocated to a credit assessor for review
- Credit report reviewed, loan and servicing calculations are reviewed and checked
- Conditional (or pre) approval is issued (assuming application is acceptable to the lender)
When a property is purchased the following additional steps are undertaken.
- Valuation (if required) is ordered
- Formal approval provided
- Loan documentation issued
From this point your broker will liaise with you, the lender, and your solicitor conveyancer to ensure that everything is for an ‘on-time’ settlement.
To book an appointment, find out more information, or to receive a FREE copy of our First Home Buyers’ Guide, please register your interest below.