Explaining the loan process

The home loan process, step by step

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.

Start with your goals and borrowing position

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.

Borrowing Power Calculator

How does the process work?

Step 1

Arrange a pre-approved loan

If you haven’t started your property search or are still looking, a pre-approved loan can be useful. It gives you a clear picture of what your spending limits are and gives you peace of mind that if you find a property you’re really interested in you can move quickly to make an offer.

Step 2

Find your property

Make sure you do plenty of homework when you’re on the hunt for a new property. Research property prices in the area, potential capital growth and existing and planned infrastructure, such as roads, public transport, schools and shops. If you’re unfamiliar with property values in the area, consider a full valuation carried out by a registered valuer before making a final decision.

Step 3

Appoint a conveyancer

You will need a conveyancer, solicitor or settlement agent to act for you to complete the sale.

They’ll be able to:

Check all rates and taxes have been paid,
Check land use or building approvals for the property
Order any relevant searches

They may also help sort out any inspections. On settlement day, the conveyancer will check the correct amount of money has been transferred from your lender to the seller and all fees – such as Stamp Duty – are paid, so you can take legal ownership of the property.

Step 4

Make an offer and sign a Contract of Sale

When purchasing property, whether at auction or through an offer, you’ll sign a Contract of Sale outlining the price and terms. This could include conditions like lender approval, building, and pest inspections. The settlement period, typically six weeks (shorter in some states like Queensland), finalises ownership.

Note: Even with a pre-approved loan, your lender requires a property valuation before granting full approval; unsatisfactory valuations may affect loan approval.

Step 5

Pay a deposit

A deposit is required once a Contract of Sale has been signed by both parties. You won’t yet have access to your home loan, so your deposit will need to come from savings or elsewhere. You may also be able to arrange a deposit bond until settlement.

Step 6

Cooling-off period

If you didn’t buy your property at auction, you may have a cooling-off period when you can cancel the contract, although there may be a small penalty. Cooling-off periods don’t necessarily apply in every state, so check with your relevant state authority to find out what your rights may be.

Step 7

Unconditional contracts

Be very cautious about signing an unconditional contract or bidding at an auction especially if you’re not certain about whether you’ll be able to obtain finance or about buying the home.

You should also consider obtaining legal advice before signing a sale contract or bidding at an auction.

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