Mortgages, Money and Me

The loan application process

After your offer to purchase has been accepted, it’s time to make sure that your finances are in order, ready for the purchase.

Your preliminary discussions with your mortgage broker or lender may already see you a fair way along the way on this journey if a pre-approval was put in place before you started house hunting.

Think you are ready to go? This is the step-by-step process to actually apply for the loan:

Step 1: Preliminary assessment

A preliminary discussion is held with your broker or lender to identify your requirements and objectives in looking for finance.  This enables them to research your options to find a solution that meets your requirements.

Step 2: The interview

Your broker or lender presents their findings and suggests solutions that are tailored to your individual circumstances. Ask lots of questions at this point and make sure you fully understand your finance options.

Information is gathered from you to support your loan application (such as payslips and bank statements) and your broker or lender assists you to complete all of the paperwork for the loan application and the First Home Owners Grant (if you are eligible).

Step 3: Lodgement

Your application is collated and sent to the lender with covering notes addressing any of your unusual circumstances, and mitigating factors for circumstances that may be less than ideal.

Step 4: Conditional approval

Typically, the lender takes 2-5 days to assess your application.  This may be longer if they are busy, but they should advise expected timeframes.  The lender considers your application and if all is well they issue a conditional approval.  Normally this is subject to an external valuation of the property you have purchased.  They may have other conditions as well (such as further proof of income).

NOTE:  Pre-approval for finance follows the same process as above with pre-approval and conditional approval basically the same thing. Once you find and make an offer to purchase a property the application continues as per the following steps.

Step 5: Valuation

This may take a further 3-5 days depending on accessibility of the property.  The lender will arrange for an independent valuer to visit the property and submit a valuation report based of their assessment of the property.

Step 6: Unconditional approval

Normally takes 2-3 days after the valuation has been returned to the lender.  The unconditional approval is issued by the lender when they are satisfied with all aspects of the loan application and have obtained a satisfactory valuation from the valuer.

Step 7: Loan offer and mortgage documents

The lender will now instruct their solicitor to draw up the loan documentation and forward to you for signing. You need to review these documents, possibly with your solicitor. Once satisfied, sign and return the documents to the lender. This stage typically takes 2-3 weeks.

Step 8: Settlement

After the lender receives the signed documents from you, they will book a settlement date with your solicitor.

Congratulations!  Once you reach Settlement Day, the house is yours!

Protecting your Purchase

In most cases Home Building insurance is a requirement by lenders so that their interest in your property is protected in case of things such as fire, flood or storm damage.

You may wish to consider insuring the property as soon as you have signed a purchase contract.  Many insurers will provide free cover for the period between offer to purchase and settlement.

Further to this you can have Home Contents insurance that protects your personal belongings from similar events as well as burglary and accidental damage.  This is normally provided by the same insurer as your home building insurance and is included on the same policy.

As ever, please feel free to ask me any questions and let me know if I can assist you in this journey!