Home Loan Approval Process
It is the duty of the lending specialists at Definitive Finance to ensure that the loan approval process is as seamless as possible to you, our client. Nevertheless, it is important that you understand the basics of the process and what you can expect of us. It is our commitment to you that we keep you informed every step of the way. To achieve this goal we have set into place systems and procedures that will cause us to make contact with you at regular intervals. We understand that buying a home is both exciting and stressful. If we can alleviate the anxiety caused by lack of communication, the experience should be more exciting than stressful for you.
At our initial discussions a lending specialist will gather information from you that will allow us to make a preliminary assessment as to which lender and what loan product may be suitable to your requirements. We will ask that you provide us with documentary evidence of a financial nature, and request information that will confirm your identity. The lending institution will need this information through its assessment process, and to open a loan account upon settlement. Information required may vary between lending institutions.
Once we have completed the application form with you, and we have received all relevant paperwork from you, we move to submit the application to the lender. Please be aware that you are in control of the process at this point. The faster we receive all documentation the faster the application will proceed to the next step.
If you are eligible for the First Home Owners Grant the lending specialist will prepare your application and submit it to the lender with the home loan application. Most home lenders can apply for the grant on your behalf, and have the grant available for your use at time of settlement (or in the case of construction loans, at time of first progress payment to the builder). Information relating to the First Homeowners Grant in Queensland can be found at the website of the Office of State Revenue (www.osr.qld.gov.au).
The application lodgement process can be complex and time-consuming, but is often made simpler with the assistance of our experienced team, depending on your personal circumstances and the requirements of the lending institution. Your lending specialist will give you an estimation of the time it may take before the application is in the system. You will be advised by us when the lending institution acknowledges receipt of the application.
The time it takes lending institutions to process your application varies greatly. Once we know which institution we are to present it to, we can give you a reasonably accurate expectation of timing. We are kept informed by banks of their processing times on a regular basis, but these can blow out overnight with heavy demand.
The first phase of the assessment stage is ‘conditional approval’. The lending institution has checked your credit history. Should you wish to check your credit file, the following link will take you to Veda Advantage (www.mycreditfile.com.au).
Based on your income and any current financial commitments, they have assessed your capacity to repay the proposed borrowing and found it to be within their guidelines. Other criteria, such as employment stability and loan security issues are examined. This phase may take around three working days, but can take much longer, depending on volumes experienced by the lender.
We will contact you on the third day with an update, or earlier if we receive advice of conditional approval.
The second phase of assessment starts when the property valuation is ordered by the bank. Valuers generally take no more than three working days to complete their work. Upon receipt of the valuation, the lending institution may take another 24 hours to read the valuation, submit it to the Lenders’ Mortgage Insurers if they are involved, before they issue an unconditional approval advice. Definitive Finance undertakes to contact you with an update on the third working day after conditional approval is given, or earlier, of course, if the loan is unconditionally approved.
An approval letter will be posted to you upon unconditional approval. If you are purchasing a property and have engaged the services of a solicitor, we will fax an approval advice to them.
Some lending institutions prepare their own documentation; others outsource this work to solicitors who specialise in this field. For that reason, and again because of variations in demand, it is difficult to accurately predict delivery to you of loan documents. When we phone you to confirm unconditional approval, we will be able to provide you with a time frame estimation based on advices from the lending institution. We will phone you on the fifth working day after unconditional approval with an update should you not have received documents.
Once you receive the documentation, it is important to execute and return them to the lending institution or their solicitor promptly. You may choose to ask your own solicitor to peruse the documents and explain them to you before signing them; or you may use the services of a Justice of the Peace or Commissioner of Declarations if you are satisfied that you have read and understood them.
The lending institution will have asked you to provide a certificate of currency of insurance covering any building you are offering them as security for the proposed borrowing, having noted the interests of the lender as the mortgagee of the property. It is a good practice to provide them with a copy of this when you return the executed loan documents.
You can now rely on the lending institution and your solicitor to attend to this process. The lending institution will make the loan funds available to your solicitor on the day of settlement, together with the First Home Owners’ Grant, if applicable. Please ensure that you have provided your solicitor with the balance of any funds that you have offered as equity for the purchase at least three working days before the settlement date.
It will be our greatest pleasure to congratulate you on the purchase of your new home!
We hope that our relationship with you has just begun. Please don’t hesitate to contact us if you have any issues with the loan or the lender, or for any further financial requirements.
The best compliment you can give is to refer us to your family and friends.