Home Loan Process [What it is, Step by Step] in Australia

How do you apply for a home loan? When you're buying your first home, or making a move from your current one, we know that getting a home loan can be confusing. We can help explain the steps in the home loan process from beginning to end so you can relax and find the right house to suit your life.

00:00 Home Loan Process [What it is, Step by Step] in Australia
00:18 1. Step One: Chat To A Mortgage Broker
01:26 2. Step Two: Prepare Your Application
01:55 3. Step Three: Conditional Approval
03:07 4. Step Four: We Arrange A Property Valuation
03:43 5. Step Five: Unconditional Approval
04:21 6. Step Six: Sign Your Loan Documentation
05:05 7. Step Seven: Settlement
05:43 8. Step Eight: Two Weeks After Settlement
06:29 9. Step Nine: Annual Review

https://www.huntergalloway.com.au/home-loan-process/

Comparison
The first important step in the home loan process is to compare your options. There are thousands of home loans out there from hundreds of providers. This can seem a bit daunting, but the upside is that there's likely to be a home loan suited to your situation, no matter how unique.

You'll want to compare home loans on their interest rates, their fees and their features. Educate yourself about some of the common types of home loans, some of the features they include and the structures that might work best for your situation.

Comparing home loans will help you find one suited to your circumstances, and will ensure you're getting the best deal possible. A savings of a few tenths of a percent can make a difference of thousands of dollars over the life of your home loan. It's worth taking the time to compare.

Application
Once you've found the home loan you think is right for you, it's time to apply. The home loan application process is relatively straightforward, though you will need to provide some documents and source some information.

Lenders will want to know about your employment. They'll want to see that you have a stable source of income and that you've been in your current job for at least 12 months. If you're self-employed, they'll want you to have been operating your business for at least two years.

Lenders will also want to know about the property you're buying. They'll want to see that it's a type of property that they feel comfortable accepting as the security on a home loan. In other words, they want to know that in the worst case scenario if you default on your home loan, they'll be able to sell the property to recoup their losses.

You may be asked to provide a variety of documents through the application process. A few of them will include:

Identification
Payslips
Bank statements
Credit card statements
Personal loan statements

Pre-approval
Once you've applied, your application will move to the pre-approval stage. This usually takes 2-3 business days, though some lenders can offer pre-approval the same day you apply.

Pre-approval is a lender's indication that pending further documentation and review, they would be willing to lend you a certain amount of money. This is a valuable step because it gives you an idea of your borrowing power, and hence your buying power.

If you're still searching for a property, home loan pre-approval can give you a serious edge. It shows vendors that you're serious and that you can move quickly should your offer on a property be accepted or should you win at auction.

However, it's important to remember that pre-approval doesn't constitute a binding agreement to lend you money. Your lender is only indicating in principle that they would lend you a certain amount.

Full approval
After you've gotten pre-approval, your home loan will move toward full approval. At this stage, the lender will want to know more information about the property you're buying.

To reach full approval, you'll need to provide a copy of the signed contract for the property you're purchasing. The lender will then conduct a valuation of the property if one hasn't been done already. This lets the lender know how much the property is worth, and dictates the loan amount your lender is willing to offer you.

At this stage, your lender may also undertake further credit checks and review of your documents. You could be asked to provide more documentation. You'll also need to get your building and contents insurance sorted at this point.

Once your home loan is fully approved, you'll receive your loan offer documents. Once you have signed and returned these, you have agreed to accept a specific loan for specific terms.

Settlement
Settlement is the process of the lender funding your home loan, paying the vendor and exchanging signed documents. After this stage of the process, you've officially bought your new property and will take possession of the keys.

At settlement, your lender will pay the vendor, the solicitors and/or conveyancers and any fees and government charges. If you have to pay stamp duty, it will usually be paid at settlement.

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