There’s nothing like being formally approved by a lender for a home loan. It’s your green light to buy the property you have your heart set on. Borrowers who have taken the necessary steps in the pre-application phase will be in a strong position to secure the property they want.
Here, we explain how to get formally approved. Whether you’re buying your first or second home, investing in a property or refinancing your home loan, we’re here to help. As your mortgage broker, we can support you through the process and do the legwork for you.
Formal home loan approval requirements
Getting pre-approved (also known as conditional approval) is usually the first step before starting the property search. This will require you to meet the lender’s borrowing criteria and provide various types of documentation, which may include:
Identification
- Photographic proof of identity such as a driver’s licence or passport.
- Secondary documentation such as a Medicare card, rates notice or utility bills that are no more than three months old.
Proof of income and savings
- Lenders will want to know how much you earn to see if you can service a loan.
- They may ask for payslips, bank statements, group certificates, Notices of Assessment and written references from your employer, for example.
Assets and liabilities
- You’ll need to declare everything you own, plus all outstanding debt.
- Assets might include things like savings accounts and/or term deposits; liabilities could be credit cards and personal loan debts.
Current expenses
- The lender will want a comprehensive list of your current expenses, with everything from your utility bills to your weekly coffees.
The process
Step 1: Gather all necessary documentation & submit your loan application
Unconditional approval (or formal approval) happens once you have met all of the lender’s conditions and they are satisfied that you qualify for the loan. There’s usually a stipulation in your contract saying “subject to finance” when you make an offer on a property, so that you can apply for formal approval.
As your mortgage broker, we’ll help you gather all of the necessary documentation and submit your application. The lender will then arrange a valuation and assess the property. The timeframe for reviewing and processing your application will depend on your situation, the settlement period, as well as the lender’s service levels and seasonal peak periods such as EOFY and Christmas.
Step 2: Review the paperwork
If approved, you’ll receive a confirmation letter and final loan documents to review, sign and return to the lender (it is recommended to get your solicitor to review these). Many lenders now offer the convenience of digital document signing.
Step 3: Talk to your broker about insurance
You may be required to take out building insurance. If you’re an investor, you may also need landlord insurance. Speak to your broker about the right insurance for your needs.
Step 4: Do a final inspection
After this, you should arrange a final inspection of the property before settlement to ensure everything in the contract of sale is in working order.
Step 5: Settlement
Your settlement agent will meet with the lender and the seller’s representatives to exchange documents and the balance of the purchase price will be paid to the seller.
Step 6: Enjoy your property
Collect the keys and do a happy dance! The property is now yours.