How to get a home loan?
When it comes to getting a home loan, the process can seem daunting - especially if this is your first application.
However, by being aware of the home loan application process - and the documents and information you may be asked to provide along the way - you can ensure everything goes as smoothly as possible.
Research and pre-approval
The first thing you'll want to do is research the type of mortgage rates available from different lenders. Home loans can differ significantly and you will want to factor several considerations - including fixed or variable rates, payment plans and other terms and conditions - into your final decision.
You'll also want to set yourself a budget and determine the amount of money you need to borrow. Getting pre-approved for this amount could be a wise idea if you are still shopping around for the perfect property. Pre-approvals tend to last for up to three months and can help you move more quickly once you have found the perfect property.
Documentation you may need
During this application process, you'll be asked for several pieces of documentation. This includes showing that you have enough savings to cover the deposit on your property and other fees that may be applicable.
If you are self-employed, you may be asked to show tax returns and other financial information from the past two years, while anyone who is employed will need to show evidence of their payslips.
Group certificates and 100 points of ID may also be requested.
Finding the perfect property
Buying a property is a long-term investment and is not a decision to be taken lightly.
You will want to consider factors including location, age of the property, size of the unit or house and your own long-term plans - for example, you may be looking for a home for a growing family or downsizing after adult children have flown the nest.
Once you've found a home that appears to tick all the boxes, you'll need to ensure the relevant checks are carried out - including pest and building inspections, as well as any relevant strata checks. A conveyancer should also be hired to check over the contract.
Making your purchase
Depending on whether you are planning to buy at auction or make an offer on a property, you'll find there are some slight differences in the transaction process.
If you are buying at auction, you will usually be required to pay a ten per cent deposit at the moment the hammer falls - and there is no cooling off period. Your deposit is then held in trust by the agent - and any interest earned is split between you and the vendor during the settlement process.
Buying from an offer usually involves a non-refundable payment of 0.25 per cent as a holding deposit if it is accepted.
From this point, you will usually be entitled to a five-day cooling off period, at which time you should organise your inspections and valuations, as well as discuss your finances with your lender.
During this period, it is essential to be aware that the property will not be held exclusively for you until a deposit of between five and ten per cent has been paid and contracts are signed.
Processing your home loan
At all stages of this process, it is important to ensure your lender remains informed - they will be able to process your home loan more quickly if they are aware of all the details.
This information includes the contact details of your solicitor or conveyancer, real estate agent and vendor, as well as a copy of the contract of sale.
At this point, first-time buyers should complete their forms for the First Home Owners Grant - these can be supplied by the lender or through your solicitor or conveyancer.
Once a valuation has been carried out and all the other documents have been received and processed, your lender will grant formal approval on your home loan and the documents will be sent to you.
At this time, you will need to sign these documents and return them. Your solicitor or conveyancer will then liaise with your lender until the loan settles - this usually occurs between 30 and 42 days after the contract has been signed, depending on its terms.