Navigating the property market may seem hard, but navigating the home loan application process can be even harder, especially if you have never applied for a home loan before. Choosing a mortgage broker is the best way to get started when you’re applying for a home loan. At Melbourne Finance, we make it simple to understand and stress-free so you don’t have to worry about anything other than what home you want to buy.
Let’s dive into the home loan application process so you know what to expect when you decide to seek finance for purchasing a home.
There are lots of factors to consider before you even start looking for home loans. One of the most important decisions is which broker you are going with, and who can best cater to your needs. Other things to consider include:
- Interest rates: Do you want fixed or variable interest rates?
- The duration of the Loan: 25 or 30 years?
- Loan features such as redraw, offset abilities and credit cards.
The Home Loan Application Process
Step 1. The initial conversation
Brokers are different from banks as we want to get to know you first. At Melbourne Finance, it’s all about understanding your lifestyle, your goals, your commitments and your financial standings rather than just reviewing bank statements. We want to make sure you are able to purchase the home you want without financial struggle. In our initial meeting, we will discuss your situation and why you have chosen to purchase property now.
Step 2. Gathering documentation
After the initial meeting, it’s time to gather documents to begin the home loan application process. To get started you are going to need:
- Photo Identification and document proof that you are who you say you are.
- Bank statement, payslip and Group Certificate.
- Documents outlining properties you own, shares you have or separate savings accounts.
- Documents outlining financial commitments such as car repayments, personal loans and leases.
- You can submit all of these documents online using either a document scanner or a high-resolution camera.
At Melbourne Finance, we also have low documentation (lo doc) options available for people who want to get a preliminary assessment as quickly as possible to expedite the application process. This option can only be provided to self-employed applicants that haven’t completed tax returns. Usually, this application process requires a photo ID, bank statements, Business Activity Statement or an accountant declaration and the applicant must have been GST registered for at least 2 years.
Step 3. Borrowing capacity and lending options
When we have all the documents necessary to get started, we begin the formal assessment process where we are required to assess your financial information against the lending criteria. It is here where we begin to determine your potential borrowing capacity. If needed, we are able to give you a preliminary assessment so you are able to begin to search for your new home with confidence.
After we have reviewed your financial standings, we run through potential lenders and consider repayment terms that would be best for your financial circumstances. It is after this process that we present you with some home loan options in which you get to choose your preferred lender.
Step 4. Pre-approval
After settling on a lender, it is our job to help you get pre-approval for your home loan. Pre-approval should be on your musts-list when purchasing a house as it gives you an accurate indication of what you can afford to purchase. Having pre-approval is essential if you are considering bidding at an auction, as often bids are legally binding and you are required to pay the deposit if successful. It is important to note, pre-approval is not official approval however, with pre-approval you are likely to gain unconditional approval so long as your financial circumstances don’t change.
Step 5. Putting in an offer
Once you have pre-approval, it is time to do some research into the area and the property type that you want to buy. Domain recommends that when considering purchasing a home, evaluate its sellability. Sellability reduces the amount of potential risks and gives lenders greater confidence in lending to you.
After you have found the house of your dreams, put in an offer and let us know so we are able to perform a property valuation. A property valuation can take up to a week to process but the sooner it is completed the sooner you are able to receive unconditional approval.
Step 6. Unconditional approval and settlement
Following a valuation and accepted offer, the lender will confirm the loan and begin to set up the transfer of funds. During this time, we will follow up with yourself and possibly your conveyancer to go over the terms and conditions of your loan application.
Following the acceptance of unconditional approval, you can confirm a settlement date with the property owners. Settlement is the date funds are transferred to their account and the day you are able to move in.
Time to get started?
Are you thinking about purchasing a home within the next six months? Now is the time to get in touch with our friendly team here at Melbourne Finance. We know that finding the right loan is hard which is why we do the leg work for you. For us, it is all about helping you move into your new home sooner. Give us a call on 03 8568 3644.