Let’s just agree to this, we have all been confused about the entire mortgage process. Most of the times, fresh home buyers and seasoned borrowers feel tired because of endless steps involved in the process. Mostly, borrowers are unable to realize that the process of home loan starts well before applying for the loan and extends well after the settlement.
Let’s take a look at the following 6 steps to be taken in order to get a mortgage.
Step 1: A meet-up with mortgage brokers
Step 2: Your Loan structuring
Step 3: Getting pre-approval
Step 4: Looking for your home
Step 5: Getting legitimate formal approval
Step 6: Settlement
Meeting with mortgage brokers
An ideal way to start is by having a formal face-to-face meeting or over the phone with a mortgage broker. Your mortgage brokers will tell assist you with what you should look for, kinds of products that are available, the interest rates and charges associated with every step.
In addition to this, they will be able to offer you a product as per your needs. It is a perfect time to talk about the amount of money that you are willing to borrow and the amount you have for a deposit. Since this can affect your Loan To Value Ratio (LVR) and might define interest rates available with additional charges, for instance, LMI (lenders mortgage insurance).
Ensure to take some time and ask your mortgage broker to clarify and explain everything about the whole process.
Once you reveal your financial data and requirements to your mortgage broker, he will complete the assessment and select the most ideal product for you, which fulfils your needs, maximizing your benefit. In contrast, broker will ensure that the specific borrower that he has selected for you accepts your financial state. In the next step, your broker will explain you the product’s features and the charges associated while applying for a home loan. When they will you’re your permission, he might try getting pre-approval for you.
If you have your home loan’s pre-approval, it means that the bank has pre-evaluated your mortgage. It is a conditional approval which involves no charges and it is valid for about 3 to 6 months relying on the borrower.
Having a pre-approval, you can identify if your personal financial situation fulfils the lending criteria of the bank or not.
It will also give you a suggestion of how much you can buy so that you avoid wasting time on chasing for properties that you can’t afford.
Nevertheless, you should also know that not every pre-approval is reliable. By having a reliable and legitimate pre-approval, you will not have to wait for the bank to go through the whole process of loan application. This can result in a short closing period on your home-loan.
Finding your home
Once you’ve been pre-approved for a certain amount, you can shop more confidently within that price range. Whether you’re buying the property to live in or as an investment property, it’s important to do a thorough research. The main listing websites are Realestate.com.au and Domain.com.au. These sites offer comprehensive listings and some market insights too.
Even if you’re buying the property as your home, it’s still important to consider its sell-ability. Ask yourself who would buy this property if you have to sell in a hurry. This does not only help to reduce your risks, but it also helps you gain formal approval from the banks. Generally, banks are more conservative when it comes to lending for unusual property types, so try to stick with the “bread and butter” type properties.
Once you’ve chosen your property, you should send the contract of sale (COS) to your solicitor for review in order to make sure there is no adverse conditions against you before you can sign up it. After your solicitor acknowledged that the COS has no problem, then you can sign up it and move on to the next stage in the home loan process where you actually try to get formal approval.
Get formal approval
After you have signed up COS and paid 0.25% deposit, you should send COS and deposit receipt to your broker straight away, so that he can order valuation report for you. After valuation report is completed, your broker will send COS, deposit receipt and valuation report to lender directly. The lender will assess it to check its value and make sure the security is acceptable. Once the lender has everything they need and can confirm their willingness to lend, you’re formally approved. This is also known as unconditional approval.
When borrowing more than 80% Loan to Value Ratio (LVR), you may also need LMI approval.
Next, the lender will give you a loan contract to sign. After you’ve signed and returned it, you’ve reached the final stage in the home loan process: settlement.
Settlement is when you officially become the owner of the property.
Your solicitor can help you with everything you need to know about it but what about your home loan?
After settlement, you’ll get ongoing help where we will review your interest rate and help you switch loan products if needed. We’ll also perform an annual review on your home loan to check if you’ve had any problems.