Applying for and getting a home loan

Find out here how to apply for a home loan and get it approved, what the home loan process involves, how much deposit you need, what credit profiles and valuations are about and what costs are involved in getting a house and a home loan.

Deposit – how much do I need?

How much deposit you need will vary depending on your individual circumstances and the lender and home loan product you choose. Go to Deposit – how much do I need?

Maximum borrowing capacity

Find out how lenders assess your borrowing capacity, taking into account the maximum cost of the property, the size of your deposit and the home loan. They will typically review all your income sources and expenditure, add a margin for safety, and then calculate your uncommitted monthly income. Find out your maximum borrowing capacity here and the most important factors a lender considers when approving your loan.

Home loan application to settlement step by step process

Once you have agreed to take out a home loan either directly though a lender or through a mortgage broker, there is a flow of activity that is generally consistent with every home loan process. Depending on the complexity of your situation, the time from the initial meeting to a final approval will take anything from a few days to a couple of weeks. You can find a step-by-step indicator of what you can expect here.

Documentation – applying for a loan

For most standard home loans, when your mortgage broker comes to see you, the whole process will be quicker if you have your documents ready. All borrowers are required to provide account statements, show originals (and provide a copy) of 100 points ID Check, evidence of shares and other investments, contract of sale/purchase for the property if available. For more detailed information, go to Documentation – what do I need when I apply for a loan.

Getting your loan approved

The most important thing to know about getting your loan approved is that a lender can only make money out of lending money if they find people to lend it to. While it might not always seem this way, when assessing a loan, a lender is looking to see why they would approve, not decline a loan application.  There is typically a series of steps that any loan travels through to approval. Outlined under Getting your Loan Approved is how your loan usually gets approved or declined.

Credit profile – how does it work?

When you are applying for a loan, the information on your credit file is taken into account. Anyone who has borrowed money (for a credit card, mortgage, car etc) or has any kind of credit account will have a credit file. Amongst other things, banks, retailers and other credit providers rely on your credit file when deciding whether to lend you money or not. To find out more about how credit profiles work, visit this page.

Valuations

When a lender’s credit team processes your home loan application, their main objective is to assess for risk. One of the things they assess is the property as a saleable asset. In summary, even if you appear to be able to make loan repayments, as a fallback, what is your property value and how much could it be sold for if necessary?  Find out how valuations work here.

Costs involved in buying a house and getting a loan

Along with the costs of checking out the property you are buying and physically moving from the one you are now in, there are a number of government fees, taxes, legal fees and lender fees incurred when you go for a home loan and buy a new home. Remember that most of these are paid before or around the time your property settles, so your savings or loan will need to cover these amounts as well. To find out what you should plan for go to Costs involved in buying a house and getting a loan.