The home loan application process might seem to be something complicated and overwhelming at first: looking for a property, organizing all documents, dealing with lenders… It is not easy indeed, but if you have enough information to design a solid plan, this journey becomes much easier to deal with.
This is why we put together this blog post to explain the whole home loan application process, step by step: from the first meeting with a mortgage broker to the day you move in!
The home loan application process
1- Understanding your profile
The first and most important thing to do when applying for a home loan is organizing your financial life and understanding your income and expenditures to see how much you would be able to borrow and how much you can afford to pay on your loan each month.
It might sound a bit complicated at first, but you don’t need to do this alone. The best advice you can take is to find an expert to help you in this journey, and they are called Mortgage Brokers.
What does a mortgage broker do?
Mortgage brokers act as intermediaries between lenders and borrowers. In order words, we understand the home-buyer profile and match it with the several different options of lenders out there to help the buyer (you) find the best home loan for your needs.
You sit with a single person and have access to more than 30 different lenders. This gives you a choice of what you can have access to and helps you deal with the institutions and criteria that are constantly changing, which makes your life easier and increases your chances of success.
At Capta Financial, the first thing we do is sit with you and understand your financial situation. This is important to help us work out your borrowing capacity and which lender best fits your profile.
And before you think you won’t have enough money to buy the house and hire a specialist, there is another thing you need to understand. Generally, mortgage brokers are paid by a commission on loans settled by the lender, which means you won’t pay a single extra cent.
If you want to understand a bit more about how a Broker works, check out this blog post.
2 – Choosing the most suitable lender for your current situation
As mentioned before, there are many different lenders in Australia, and each one of them has its own policy and requirements to determine if they will lend you the money or not.
Some banks may ask for your history of savings, for the kind of employment contract you have, for the visa you currently hold (if you are not an Australian citizen), not to mention a different amount of deposit.
With all this in mind, it is crucial that you find a lender that matches your profile; otherwise, the chances of getting a home loan declined is higher.
3 – Applying for pre-approval
Ok, so now you’ve organized your financial life, you’ve found the bank, the next step is to apply for a pre-approval. This is an agreement from the bank stating that they are willing to lend you a certain amount of money to buy a house.
The pre-approval is not the official home loan yet, but a written agreement that shows you have a high chance of getting it approved, which will make your offer much more attractive to the seller.
A pre-approval process does not take much time to be ready: it usually takes some business days, but this time frame varies from each bank. The agreement usually lasts from 60 to 90 days, which means plenty of time for you to find the right house for your family to buy.
4 – Searching for a property
Now that you went through these three crucial steps of the home loan application process, it is finally time to search for the property!
One of the most important tips to find a good home is to stick with the budget planned. You will see amazing properties out there, but keep focused, don’t fall in love with the first house you visit and always have in mind the maximum amount you can pay.
You can do your research online using apps or Australian property listing websites, visit some homes, attend auditions, and prepare a list of the ones you liked the most, considering the neighbourhood, amenities available nearby, cost, size of the property so on. This helps a lot to balance the pros and cons before deciding.
5 – Signing the contract and paying the deposit
Once you have found the house, the next step of this process is to sign the contract with the seller (it can be a particular seller or a real estate) and pay the deposit. The amount varies according to the property’s price, potential government grants you might be eligible for and how much money the bank approved you to borrow.
If you want to learn more about the deposit, check out this blog post explaining how much deposit you need to buy a house in Australia.
6 – Applying for a home loan
After that, the lender will conduct a valuation on that property to determine if the sale price is following the market, which will also impact the amount the bank will lend to you.
You will also have to provide a list of documents, which we help you prepare if you decide to work with Capta. If all terms are met, the lender will issue the formal approval, also called unconditional approval. Congratulations, this means you are finally able to get a home loan!
Now it is time to sign the contract with the bank – specifying all the fees, interest rates, the loan amount given – and formalize your home loan approval.
7 – Settling in
With all sorted out, it’s time for you to get the keys and move in.
Congratulations, you are at home now!
The whole home loan application process, in fact, does not look like something easy and quick because it is not. However, you don’t have to go through all this alone! We are here to guide you every step of the way, so please get in touch with us.