12 Dec 2019

The home loan application process in 8 simple steps

Preparing to buy a home is an exciting time. You’re likely imagining getting the keys and setting foot in what will be your new home for a long time. Before you can turn your vision into reality, you have to start your journey at the home loan application process.

Here are 8 steps to ensure that your home loan application process is swift, enjoyable and as smooth as possible.

1. Talk with a lender

A lender will help you organise and navigate the home loan application process. Lending specialists help secure your loan while providing valuable insights based on your financial situation. They’ll explain the different loan options, provide ongoing support in your loan application, and provide you with the knowledge and tools to find a suitable loan. It’s best to speak with a lending specialist as soon as you’ve decided that you want to buy a home. This sets you up for a smoother application process; one with fewer hurdles and more excitement. 

2. Proof of employment

To secure a loan, lenders will need to see proof of employment for 6 to 12 months. The longer you’ve stayed in your current job, the better. Lenders also want to see that your income is congruent with the loan amount you’re asking for. Prepare three recent payslips and include anything that could be considered an extra source of income, as this could significantly help your application. 

Extra sources of income may include:

  • Overtime pay
  • Rental income
  • Dividends from shares 
  • Fringe benefits
  • Centrelink benefits
  • Freelance work

3. Preliminary assessment 

Once your documents are received, lenders will conduct a preliminary assessment where they’ll assess your financial situation. They’ll determine whether the loan you’re applying for is the right fit. This will involve a credit check. So, it’s important to give yourself a few months to watch your credit score and fix any issues that may slow down your home loan application. 

4. Pre-approval

If everything checks out in the preliminary assessment, lenders will offer you pre-approval. This is a conditional offer which means your loan application is valid. It gives you confidence at open homes and auctions because you can make offers knowing that your loan is close to being finalised.

5. Unconditional approval

Unconditional approval is known as formal approval. It means the lender has everything they need from you and they’re happy to approve your loan. Great work, this is cause to celebrate. One thing to be aware of, if you’re borrowing more than 80% for your home loan, you’ll need Lender’s Mortgage Insurance (LMI), and this may cause some further back and forth.  

6. Issuing the loan

This is the last step in the home loan application process. The lender will send a contract for you to sign and accept the offer. You may go through the contract with a solicitor if you need independent legal advice. Once the contract is signed, get it back to your lender as soon as possible to avoid any additional delays. 

7. Settlement 

Settlement occurs when your lender can confirm that the loan has advanced to your bank, making you an official homeowner.  Congratulations! This is the moment that you’ve been waiting for. You’ll receive an official welcome letter along with documentation confirming the details of your home loan agreement. Keep these documents in a safe place. A good practise is to scan the documents to your computer, just to be safe. 

8. After the settlement

Once you’re settled and have adjusted to being a homeowner, a lending specialist will check in to make sure that your loan is still serving you well. Lenders understand that life events can happen, and circumstances are prone to change. Whether you’re starting a family and looking to upsize, or you’re looking to refinance – at Mortgage House, we’re with you all the way. 

Mortgage House

At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.

Our job is to make the home loan process efficient and smooth; getting you settled into your new home quicker. 

If you’re thinking of buying a home,  contact us for information about the best options for you when it comes to your mortgage.

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