Getting a home loan can feel complicated when you’re dealing with lenders, documents, contracts and deadlines at the same time. This guide explains the main stages of the home loan process, so you know what to expect from understanding your borrowing position through to approval and settlement.
Before comparing home loans, it helps to understand what you’re trying to achieve and what you may be able to borrow. Your income, expenses, existing debts, deposit and financial commitments can all affect your borrowing capacity.
My Broker & Co can help you review your position, understand potential loan options and identify what you may need to prepare before applying. Starting here gives the rest of the home loan process a much clearer direction.
The first step is getting a clearer idea of how much you may be able to borrow. Lenders assess factors such as your income, living expenses, existing debts, deposit and credit commitments when determining your borrowing capacity.
Different lenders may assess the same situation differently, so understanding your position before you start seriously looking at properties can help you set a more realistic budget.
Home loan pre-approval can give you an indication of how much a lender may be prepared to lend before you purchase a property. This can make it easier to search within an appropriate price range and understand your finance position before making an offer.
Pre-approval is generally conditional rather than a guarantee of finance. Your lender may still need to assess the property, verify your circumstances and complete its final checks before approving the loan.
Learn about home pre-approval →
Once you understand your borrowing position, you can start looking for suitable property. When you find one you want to buy, you make an offer or bid at auction depending on how the property is being sold.
Before committing to a purchase, make sure you understand the contract conditions, deposit requirements and finance timeframes. A conveyancer or solicitor can help you review the legal side of the purchase, while your broker can help you understand the finance requirements.
Once you have a property you are ready to proceed, the next stage is completing the formal home application. Your lender will generally require documents confirming your income, expenses, savings, debts and other financial information.
Your broker can help organise the application, check the required documents and submit the information to the lender. Providing complete and accurate information can help reduce unnecessary delays during assessment.
As part of the home loan process, the lender may arrange a valuation of the property to assess its value and suitability as security for the loan.
The lender will also review your application, supporting documents and financial position against its lending criteria. If further information is required, your broker can help respond to the lender and keep the application moving.
A lender may issue conditional approval when it is broadly satisfied with your application but still needs certain requirements to be met. these conditions could include additional documents, confirmation of information or completion of the property valuation.
It is important to understand what conditions remain outstanding and provide anything requested as quickly as possible. Your broker can help explain the requirements and work with the lender through this stage.
Once the lender has completed its assessment and any outstanding conditions have been satisfied, it may issue formal or unconditional approval.
This means the lender has approved the home loan based on the information and property assessed. Loan documents are then prepared for you to review and sign before settlement can proceed.
Settlement is the final stage of the property purchase, when the remaining funds are transferred and legal ownership of the property changes hands. Your lender, conveyancer or solicitor and other parties involved will coordinate the settlement process.
Once settlement is complete, the property is officially yours and your home loan begins. Your broker can also remain available after settlement if you have questions about repayments, loan features or your changing circumstances.
Your home loan does not need to be something you set and forget. Ineterest rates, loan products and your financial cirucmstances can change over time, so it can be useful to review your loan periodically.
A home loan review can help you understand whether your existing rate, repayments and loan features still suit your needs or whether other options may be worth considering.
Tell us where you are in the process and My Broker & Co can help you understand your borrowing options, prepare your application and work through the next steps.