HOME LOAN PROCESS
Are you getting a home loan for the first time? Interested in finding out how to get a home loan in Australia, Melbourne?
Applying for a mortgage can be a daunting prospect, but with the right advice and information, you can navigate the process and secure the best option for your needs.
The key to making the right decisions is to arm yourself with the relevant facts.
And if you need immediate assistance or advice, do not hesitate to call 1300 992 260 or email [email protected]
Here’s a step-by-step guide on how to get a home loan in Australia.
Home Loan Eligibility: Five Cs of Credit
Every lender looks into five factors when you submit a home loan application to determine your eligibility. These are known as the five Cs of credit. The bank can accept or deny your application based on these factors.
1. Credit History (Or Character)
Lenders will refer to your credit history to determine your character. And hence character in this context, relates to your ability to pay back the loan.
Defaults and bankruptcies are major red flags to lenders. Your employment records will also have an impact on the evaluation.
Loan applicants with bad credit histories may still be able to obtain a bad credit loan. Hiring a credit repair specialist can help open up more options to you. Hiring a mortgage broker can also be useful if you have major red flags in your credit history.
Capital refers to the properties and assets you own that can be used to secure the loan and mitigate risk to the lender. Lenders will also take into account your age when they assess your capital position.
Young people will most likely have fewer assets than loan applicants in their 40s. If you have more debts than assets or you have very little capital, lenders may be reluctant to approve your loan.
This criterion looks at how much you earn and how much you owe, and lenders use this information to assess your ability to meet the repayment obligations.
Here are some important points to consider when getting a home loan.
- The debt-to-income ratio should be higher than one.
- If you owe more than you earn, lenders will most likely reject your home loan application.
- If you have a credit card, lenders factor in your maximum credit line.
- Reduce your credit limit if you want to increase the chances of having your loan approved.
If you want to borrow more than 100 percent against the property you want to buy, you might have to put up another property as security. If you have no other assets that you can use as collateral on the loan, you can apply for a guarantor loan.
In a guarantor loan, another party (which in most cases is your parents) will put up their property as security.
Without any collateral, it is extremely difficult to take out a mortgage.
Lenders will also consider the current market conditions and how they might affect your personal finances.
Self-employed individuals and business owners will likely feel the most impact from prevailing conditions.
Even in good times, most lenders are only willing to approve up to 80 percent of the loan to value ratio.
Knowing these facts will help you prepare for what to expect when you apply for a home loan.
How to Get A Home Loan: The Step By Step Process
Need to apply for home loan but unsure about the process?
The entire home loan process is daunting. Having a mortgage broker to do the legwork can make things easier for you. Contact our expert advisors at 1300 99 22 60.
Our advisors will help you find the best available product and guide you through the application process. Our advice is tailored to your individual needs and circumstances.
Speaking to a credit advisor can make life easier for you. We have over 30 lenders on our database, enabling us to look at products from a wide range of lenders and find one suits your requirements.
Application and Documentation
When you agree to use our services to get a house loan, we will ask you to fill out an application form. The form is easy to complete and will only take a few minutes.
We will also ask you for your pay slips, identification, and bank statements. This information will allow us to understand your situation and to give you an accurate assessment right away.
During the pre-assessment stage, we will calculate how much you can borrow. We will inform you of possible questions that lenders might have about your application.
Following an initial discussion, we advise you of your options. We will match you with lenders with the most affordable rates and favourable terms
After this step, we will narrow down the products to two or three loans that most suit you.
Getting Your Home Loan Pre-Approval
Once you have selected a product, we will proceed to the next step in the approval process flowchart. We will ask you to submit additional information required by the lender and will manage your application, highlighting your strengths to the lender in order to maximize your chances of approval.
Once the lender has all the relevant information and documents, they will assess whether you meet their home loan requirements. If you qualify, they can issue a pre-approval for your loan.
This approval is based on you meeting certain conditions. For instance, the bank can issue a pre-approval as long as the collateral you can provide meets their eligibility.
Most pre-approvals have a 90-day validity.
If you have started your property search, a pre-approved loan can be beneficial. A home loan pre-approval gives you a clear picture of what you're spending limits are and gives you peace of mind that if you find a property that you are interested in, you can move quickly to make an offer.
And it may just put you in a stronger negotiating position than other potential buyers who don’t have pre-approval.
Once you have found a property, the lender will carry out an inspection and will request a valuation. The length of the process varies but we can help speed up the process by requesting for an upfront approval. This will help you skip some of the usual steps in the process and go straight to formal home loan approval.
Formal Approval For Your Home Loan
After evaluating the application, lenders will offer an approval. If the lender has all the information they need, the home loan approval can usually be issued without delay. Sometimes the process takes a little longer, for example, if you are requesting a loan of more than 80 percent of the property’s value.
Once the loan is approved, the lender will give you a formal contract to sign.
Making Offers And Signing A Contract Of Sale
Whether you buy a property at auction or make an offer on a listing, your agreement with the vendor only becomes a legal commitment when both parties have signed a Contract of Sale (Offer of Acceptance in WA).
This contract will confirm the selling price as well as any terms and conditions. Your commitment will usually be subject to lender approval, and you may also choose a building inspection report or pest inspection.
The period from signing a Contract of Sale to Settlement – when the property becomes yours legally – is usually four to six weeks (shorter in some states, such as Queensland).
Note: even if you have a pre-approved loan, your lender may still need to complete a valuation of the property you have chosen before issuing formal approval.
Choosing A Conveyancer
You will need a solicitor or conveyancer to check the legalities of the Contract of Sale. Your conveyancer will also review all rates and taxes have been paid, check land use or building approvals for the property and order any relevant searches. They may also help sort out any inspections.
On settlement day, the conveyancer will check the correct amount of money has been transferred from your lender to the seller and all fees - such as Stamp Duty – are paid so that you can take legal ownership of the property.
We have been partnering with Lydia from Home Conveyancing Reservoir for over ten years and can vouch that the prices are very competitive, and the service is second to none. You can contact Lydia on 9460-9400.
Cooling Off Period
Unless you purchased the property at auction, you are entitled to a cooling off period. This is a window where you are allowed to cancel the contract but you will be subjected to penalties stipulated in the agreement.
Laws on cooling off periods vary from one state to another. A solicitor or conveyancer can help you with these legal issues.
After getting all the documents in order, the lender will advance your loan funds. They will call your solicitor or conveyancer to confirm when the funds have been released.
In cases of refinancing, the new lender will get in touch with your old lender. They will take care of the entire home loan process for you.
As soon as we receive confirmation from your lender that the transaction is complete, we will contact you.
After The Home Loan Process is Completed
Even after the loan has been set up and funds released, our advisors will continue to support you.
Two weeks after setting up the loan, we will contact you to make sure you understand everything.
We will also request a copy of the settlement letter to ensure that everything is in order.
We will continue to check up on our clients to see if they have any issues.
Of course, you can always call us up if you want to discuss and questions or concerns about your loan.
How Long Does It Take To Get A Home Loan Approved?
The time it takes to complete the loan application process varies from case to case.
In most cases, it takes lenders 48 hours to get back to us following an initial application, though lenders can take between four hours and two weeks to response. We will review the proposals provided by lenders and get back to you within 24 hours.
Valuation takes two to seven days. Meanwhile, formal approval for your home loan can take from one to seven days.
If you have any concerns about the timeframe, be sure to inform us when you speak to our team.
What Documents Will I Need?
When applying for a home loan, you need the following documents:
- Account Statements
- Pay Slips
- Asset Documents
- Identification Cards and Documents
- Liabilities and Expense Documents
- Contract of Sales
Brokers vs. Bankers
Should you go to a bank or choose a mortgage broker when you need to get a home loan? Both have benefits – here are some points you will need to consider.
Do you know if you are credit worthy or not?
A mortgage broker can help you assess your financial position. They will also evaluate your income level and ability to pay.
In most cases, brokers have a database of lenders who are willing to finance your mortgage. They will also match you with reasonably-priced loan products.
Brokers will walk you through the entire process. They are experts who know about the credit policies of different lenders and help you get approved sooner.
It’s a good idea to ask for a recommended broker - someone a friend or family member had a positive experience with in the past.
Bank Loan Officer
If you are set on taking out a home loan from a certain bank, and you do not need to compare different options, a loan officer from the bank of your choice can help you. Banks offer affordable rates to applicants with a stable income and a strong credit history.
A bank officer can help you find the right loan product for you. Dealing directly with the lender can allow you to negotiate the terms you want.
However, bank loan officers are limited to offering the products from their bank and are not able to compare rates and benefits from different loan providers. This means you would have to do some research first for the best rates in the market before approaching a bank.
You should also consider the bank's customer service. Find one that has a good customer service record.
Is a 10% Deposit Advisable?
These days, most Australian lenders will require a 20 percent deposit. Yes, there are low deposit loans where you can borrow with only 5 percent deposit, but there are some drawbacks to consider.
The government requires lenders to take out Lender’s Mortgage Insurance (LMI) when the taking out a home loan of more than 80 percent of the property’s value. For those who are not able to secure a 20 percent deposit, lenders might consider proceeding with the loan with a guarantor.
Lenders are more risk-averse these days and getting approved for loans of greater than 80 percent of the property’s value can be difficult. Our professional advisers will guide you through the application process and help you make the best decision.
Home Loan Types: Variable Or Fixed Loan Rates
You can choose from either variable or fixed rate loans. We will assess your credit situation and will recommend the one that suits you the most.
Do you Want the Lowest Loan Rates on the Market?
We will help you find a lender who understands your needs. Whether you are a first-time home buyer or someone with a bad credit history, we can help you.
We will connect you with a reliable lender who will charge minimum interest. We also offer the lowest fees and you won't have to pay for the following fees:
- Monthly Fee
- Annual Fee
- Application Fee
Essential Loan Features
- Interest Only option
- Free redraws
- No ongoing fees
- Split loans
- Monthly, fortnightly or weekly payment options
- Direct debit arrangements
- Scheduled regular transfers
It’s As Easy As 1,2,3…
Taking out a loan doesn’t have to be a stressful experience. With our online services, you can start applying for a home loan whenever you want.
Simply follow these steps:
- Use our online application form or call us up to get in touch with a mortgage broker.
- Track Your Loan Application. We provide the real-time status of your loan, available for you to view online.
- We will do all the legwork to get your loan approved. All you have to do is sign the contract and submit the requested documents.
Are You a First-time Home Buyer?
We will help you every step of the way.
We will help you find the option that works for you and your budget. With the information we offer, you will be able to make the best property investment decision even if it’s your first time buying a home.
Your Next Home
Do you want to buy a new home? Are you planning major renovations to your current home?
We know how complex it is to take out loans for these purposes. Also, we understand your needs and we will help the process become easier to navigate.
We will assess your financial position and recommend a number of options for you, selecting the most affordable deals on the market.
Investing In Property
Are you looking into investing on property?
Whether you’re a first-time property investor or a seasoned veteran, we will give you a helping hand. We can provide you with all the information you need to make the right decision.
Switch Your Loan To Us
Having problems with your current lender?
Refinancing might be an option for you.
Find a Better Rate will help you find a lender that will enable you to pay off your home loan sooner. We will make refinancing easy for you and find a lender who meets your needs.
What should you do if you raise funds for a project? Whether you plan to renovate or redecorate, taking out a loan can bring all those projects to life quickly.
We can help you find the lender who will fund your plans with rates and offers that work for you.
Who Are We?
We are a company dedicated to helping borrowers with the home loan process in Australia, Melbourne.
If you wish to know more about how to get a home loan at the best rates, you are in the right place. We will find a package that meets your needs at a rate you can afford. Our brokers can take care of the paperwork to help you get home loan pre-approval today if that's what you need.
Mortgage Broker Melbourne Victoria Australia © 2018 Mortgage Broker Melbourne
Official mortgage broker of www.propertyinvesting.com
Disclaimer statement: This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.