The Home Loan Process.
What Does The Home Loan Process Entail?
Here’s what you can expect from the home loan process.
In the early stages of the process, the first step would be to meet with your Finance Hub and Networks Mortgage Broker. It’s generally best-done face-to-face so that the broker can obtain a clear understanding of your financial position and the purpose of the loan you’re applying for.
It’s crucial to clearly establish your goals, objectives, and milestones because taking out a home loan can affect all of this.
For example, your Finance Hub and Networks Mortgage Broker will need to consider if you’re going to want to buy a car in a couple of years or maybe another property for future investment. It could be that you want to invest in commercial property in the future. This all needs to be considered.
You can expect your Finance Hub and Networks Mortgage Broker to ask you:
Once your Finance Hub and Networks Mortgage Broker is up to date with your requirements, the next step would be to investigate your borrowing capabilities.
They will undertake a preliminary assessment to identify any possible problems from a lending point of view. Your Finance Hub and Networks Mortgage Broker will look at your:
From there, they can determine your borrowing capacity, which is the amount of money a lender will loan to you.
Lenders calculate your borrowing capacity using an assessment rate to examine your application. Generally, they have their own assessment rate based on how much risk they’re willing to take on.
But you can expect the lenders to consider:
Stage three of the Finance Hub and Networks Mortgage Brokering process involves seeing if you qualify for any government concessions and grants.
Accessing these incentives could save you tens of thousands of dollars, so it’s worthwhile determining whether you’re eligible to claim one.
To find out more about these grants and concessions, make sure to visit our government grants page.
In stage four of the Finance Hub and Networks Mortgage Brokering process, your Finance Hub and Networks Mortgage Broker will lay out the framework for your next purchase.
Here’s where your Finance Hub and Networks Mortgage Broker will give an explanation of your loan options in the context of your objectives and give you an eventual recommendation.
These options are based on your borrowing capacity assessment results in step two of the process.
Your broker will run you through each option and:
If you don’t have a strong borrowing capacity, your Finance Hub and Networks Mortgage Broker will suggest a more stable product such as a fixed rate home loan.
If, however, you have the ability to service your loan strongly (in other words, you have strong borrowing power), your broker can suggest more flexible loan options like variable interest rates.
Another example could be if you’re already an owner-occupier (so, you own the property you’re living in), but now you’re looking to purchase an investment property.
Either way, your broker should always look at the minimum risk you should take to meet your objectives and goals.
Understanding your options is the most important step of the process. So this is your chance to make sure you get clarifications on all the questions you may have.
It’s also worth noting that you don’t have to make a decision immediately. Take some time to go over all the options again before making your final decision.
You’ll also have to disclose all your assets and liabilities.
Once your Finance Hub and Networks Mortgage Broker has all your supporting documents and application in order, they will submit it to the lender and wait for conditional approval.
It usually takes a couple of days for your home loan application to progress through the queue, be picked up by a credit officer and then receive conditional approval.
It will take longer if any information is missing, so this is why it’s handy to have a Finance Hub and Networks Mortgage Broker finalise your application. They will make sure that they have all the information you need for the application to be processed.
At the conditional approval stage, you’ve met most of the bank’s lending policies subject to a few conditions. Generally, this means that you still have to find a property, so your home loan will only be approved once you’ve completed a property valuation.
Conditional approval lasts about three months, so you’ll need to find a suitable one within this time.
Once you’ve located, chosen and secured the property you want to buy, you’ll enter into a contract of sale with the seller. Your Finance Hub and Networks Mortgage Broker will then order a valuation of your property to identify its accurate value if used against a new loan.
If you’re borrowing over 80% of the property value, you may need Lenders Mortgage Insurance approval as well.
After the valuation, the lender will generally give you unconditional approval on your loan. This is when the lender has everything they need and can confirm that they are willing to approve your loan.
Once the loan has been formally approved and you’ve signed the home loan contract, your Finance Hub and Networks Mortgage Broker will return it to the lender with any requirements that they need to settle the loan.
Once the lender has certified that all of your documents are in order, they can then advance the loan funds. Generally, they will call your solicitor or conveyancer and let them know that the funds are available for purchase.
Your conveyancer will book a settlement time and date with the lender. As soon as the loan is advanced, the settlement has occurred, and you’re officially a homeowner!