The home loan process explained

Whether you’re a first home buyer, a next home buyer or refinancing, take some time to think about your financial needs, priorities and what you might want from your home loan.

Some key points to take into consideration include:

• Your current financial situation, including details of your income, expenditure, assets and debts (e.g. payslips, bank statements, any credit cards you currently have)
• Where you’re looking to buy
• The type of home you’re after (e.g. house, apartment or townhouse).
• What the ‘right property’ looks like in your mind

You may also want to get a preliminary idea of your borrowing power, as well as think about what type of home loan might be best for you. You could also run a credit check to see how your credit score’s going, as well as retrieve a property report for the property you’re looking at buying, in order to get an approximate value and inform your proposed purchase price.

Depending on your estimated borrowing power and your financial circumstances, you may decide to take a step back and assess your financial situation; perhaps you might need to save up some more, ask for a pay rise or just tidy up your finances in general.

Once you’ve decided on the type of home loan product and loan amount you want to apply for, it’s time to start pulling together the information and supporting documents you’ll need for your home loan application. These are crucial to your application, as they’ll give our mortgage brokers a fairly comprehensive picture of your overall financial situation, including your income, regular expenditure and what you can afford in regular home loan repayments.

It’s important to note that you’ll want to be as thorough as possible when collating the supporting documentation for your home loan application, so include any and all relevant information. Otherwise, you risk your application being based on a false or incomplete understanding of your financial situation.

Our expert mortgage brokers will be able to advise you on what to include and the level of detail required by lenders when it comes to your home loan application.

Once you’ve gathered your supporting documents and information, it’s time to get started with the help of our home loan comparison service. Once you’ve answered a few preliminary questions about what you’re looking for in a home loan, our meerkat technology will present you with a provisional list of the home loans and interest rates you might be eligible for.

You’ll also be shown each loan’s comparison rate, fees and features, so that you can gain a more holistic understanding of the product and what it’s offering you.

If you find a home loan you’d like to apply for, you’ll then be required to answer a series of questions regarding:

• Your borrowing circumstances (e.g. whether you’re buying a new home or refinancing, the property you want to buy, how much you want to pay for it)
• Your desired home loan and loan options (i.e. your preferred home loan term, whether you want a variable or a fixed rate, your preferred home loan repayment frequency, whether you want an offset account and/or a redraw facility)
• The size of your saved deposit relative to your desired loan size, and subsequently whether you’ll have to pay lenders mortgage insurance (LMI) or not
• Your profession, credit history and financial situation – including your assets, liabilities, income and expenses.

Once you’ve answered those questions, you’ll just have to complete an identity verification process and upload some supporting documents like payslips tax returns, income bank statements or an employment contract.

One of our expert mortgage brokers will then begin the process of verifying the information you’ve provided.

If our brokers determine that you’re eligible for your chosen home loan based on the relevant lending criteria, and that the loan in question is in your best interests, you’ll be sent a pre-filled, lender-specific application form. All you’ll need to do is review the form, make sure the details are all correct and digitally sign it via DocuSign.

Your expert broker will then send off your application for you, meaning all you have to do is wait to hear back – the timeframe in which you’ll receive a response will vary by lender, but will usually be at least a few business days.

If your application is successful, we’ll let you know that the lender has now given final approval for your home loan and made a formal commitment to lend you the money required to buy the property. Nothing’s legally binding yet, but you can consider your home loan application successful at this point, and the loan approval process just about over.

After giving you unconditional approval, the lender will send you your loan contract, supporting loan documents and a formal letter of offer to you. You’ll generally want to look over and review these thoroughly to make sure everything’s in order and you haven’t missed anything within the contract – you could also choose to have your solicitor do this for you.

Once you or your solicitor has reviewed the paperwork and confirmed they are acceptable, , it’s time to complete and sign it all in full – your solicitor can help to guide you through this process if required. Once it’s done, you can return them to the lender or we will do it on your behalf.

At some point during the exchange of contracts and submission of your application documents, your lender, your conveyancer and the selling party will agree on a future settlement date. Final settlement is usually pencilled in 21 to 90 days after the contracts of sale are signed and exchanged; the time between the two stages is known as the settlement period.

On settlement day, the balance of your home loan will be paid to the seller and once all the contracts of sale and transfer of title documentation have been dealt with, you’ll be good to go as the new legal owner of the property!

You may also need to pay your stamp duty on settlement day, depending on where you live in Australia. Some states and territories require you to pay your stamp duty upfront at or before settlement, while some give you as long as three months past settlement date to pay your stamp duty. Check with your state or territory’s revenue office for more information on when your stamp duty will be payable.

If your lender requires you to pay lender’s mortgage insurance (LMI) as a term of your mortgage agreement, this will also typically be paid on the settlement date unless you’ve chosen to capitalise it into your home loan.

Once the seller’s been paid, all the relevant documents have been signed and filed, and any other necessary payments have been made, congratulations! You’re now a fully-fledged homeowner, and you can start preparing the move into your dream home.

• Compare home loans
• First home buyer guide
• What is a conveyancer?
• Home loan pre-approval
• Lenders mortgage insurance (LMI)