Home Loan Process [Step-by-step guide]

Today we are going to show you, step-by-step, the EXACT home loan process and how long it takes to get your mortgage approved. We’ve used this exact process to help over 1300 people in the past 12 months get their home loan unconditionally approved. Here is a list of the steps:

• Step #1: Chat with a Mortgage Broker
• Step #2: Time to prepare your application
• Step #3: Conditional approval “loan approved in principle”
• Step #4: We will arrange a Property Valuation
• Step #5: Unconditional approval… Also called formal approval
• Step #6: Sign your loan documents
• Step #7: Settlement!
• Step #8: Two weeks after settlement
• Step #9: Annual review
• Bonus: How long does a home loan application take?
• Bonus: How has Covid changed the way banks approve loans?
• Bonus: How can you make sure your loan gets approved?
• Speak to your Mortgage Broker team today

Let’s dive in.

Step #1: Chat with a Mortgage Broker

Expected duration: 1 hour

Let’s face it, if you work full time, you’re spending most of your waking hours at work. And if you aren’t at work, you might try to squeeze in a few minutes for exercise and catch-ups with friends. Oh… And remember to eat, pay your bills on time and plan your next holiday! A Mortgage Broker can help you save hours searching for the right home loan option. At Hunter Galloway we have access to over 30 lenders. We can find the lender that matches your deposit and borrowing requirements. Best of all, our services are free as we are paid by the bank.

First contact

In your initial conversation with your Mortgage Broker, you will have a chat about your situation, what you are wanting to achieve and reasons for getting a home loan. During this discussion, we’ll work out your eligibility for a home loan, let you know how much deposit you will need to buy and how much you will be able to borrow across our 30+ banks.

Eligibility Assessment

The first step in the home loan application process is doing an eligibility assessment. Our Mortgage Brokers at Hunter Galloway will set up a meeting and assess your current financial situation to find out if you meet the eligibility criteria. We will also discuss your objectives and requirements to find out the best solution for you. If you meet the eligibility criteria and wish to continue, you’ll then fill out an application form and submit it along with the bank statement, pay slips, and ID. Providing a complete set of documents will speed up the application process. You are required to provide the following list of documents during the application process:

• ✅ ID documents (passport, driver’s license)
• ✅ Payslips (salary statements)
• ✅ Bank account statements (day to day account)
• ✅ Expenses and liabilities accounts (credit card, or loan statements)
• ✅ Contract of sale (if you’ve found something to buy)

Read More: 16 [easy] tips to Find the Best Mortgage Broker in Brisbane    

Step #2: Time to prepare your application

Expected duration: 1-3 days

OK, so you’ve met with your Mortgage Broker. After the initial meeting, we’ll put into action the items you discussed when you met with your Mortgage Broker, including putting together your home loan application and getting it ready to submit to the bank. To do this, we’ll complete a preliminary assessment where we will take time to go through your payslips, bank statements and other information provided in detail to make sure everything will be acceptable to the bank.

Preliminary Assessment

The next step is the preliminary assessment. Under this step, a detailed evaluation is done to identify any issues with your application from the bank, or lender’s perspective. We take time to calculate your borrowing capacity for that particular bank. After your Mortgage Broker figures out everything, we will try to find a lender who can offer the best loan packages at the lowest interest rate. This gives you an option to choose the right package for you.

Choosing the Product

After selecting your desired product, the next step in the home loan application process is to provide you with the final set of documents (like the bank application form) and sign a privacy form. Once the broker collects all the documents, they are emailed to the lender.

What can cause delays at this stage:

• ⛔️ Additional supporting documents required
• ⛔️ Missing paperwork, or delays in returning forms

At Hunter Galloway, we believe ‘slow is fast’ so we take more up front to double check your paperwork to ensure your loan is approved first time by the bank. If you want our team of Award Winning Mortgage Brokers to see how we can help, get in touch or give us a call on 1300 088 065. Read More: 10 [simple] Tips for Choosing the Best Home Loan in Brisbane  

Step #3: Conditional approval “loan approved in principle”

Expected duration: 3-5 days

Now it’s time to sit back and wait for the bank to assess your home loan application. It usually takes between 3 to 5 days for your home loan application to progress through the queue, be picked up by a credit officer and then receive conditional approval. It will take longer if the information is missing, so this is why we take a little bit more time in Step #2 to make sure we have all the information up front.

Pre-approval and Conditional Approval

Pre-approval is not the same as an unconditional approval (which we cover in Step #5). Once the lender receives your application and supporting documents, they’ll evaluate it to confirm if it is in line with their policy. The approval of an application depends on certain conditions; For example, the bank can approve your loan subject to you finding a suitable property, or even subject to a satisfactory property valuation (Step #4). Our Mortgage Brokers can also help you get a pre-approval on your loan if you haven’t found the right property yet.

How long does pre-approval take?

Once your Mortgage Broker has received your application, signed application forms and submitted everything to the lender it can take between 3-5 days to complete your pre-approval. If there is missing information, it can take longer.

What can cause delays at this stage:

• ⛔️ Banks with slow turnaround times
• ⛔️ Lenders who have special offers and higher than normal home loan volume
• ⛔️ Missing Supporting Documents
• ⛔️ Incorrectly completed forms

At Hunter Galloway we have ‘Priority Status’ with a large number of banks on our panel, this provides our customers with faster approval times and access to specials that aren’t available to the public. See how we can help you by contacting our team or calling 1300 088 065. Read More: How Reliable is your Pre-Approval?  

Step #4: We will arrange a Property Valuation 

Expected duration: 1-2 days

After you find the right property and sign a contract of sale your Mortgage Broker will arrange a property valuation by one of the bank’s panel valuers. While the valuers work on behalf of the bank, they are not employed directly by the bank meaning they can complete a valuation independent from the bank. The valuer will need to physically visit the property, so one thing that can cause delays at this stage is if your property has tenants living there. In Queensland, you need to give your tenants 24 hours’ notice before getting entry to a rental property, so just keep this in mind to keep your home loan application progressing quickly! We can arrange valuations up front before your loan is submitted to help speed up your loan application. This enables us to skip this step completely and go straight to unconditional approval.

How long does a property valuation take?

A property valuation can be arranged upfront to speed up the process and provided the independent valuer can get access to the property it takes between one to two days to complete.

Electronic Valuations

A positive change that has come about in the past 12 months is that if you have more than a 20% deposit a lot of the banks do not require you to get a physical property valuation. Banks like CBA NAB and ANZ will use electronic valuation services like RP Data to confirm your property’s value! This can speed your home loan approval up by 1-2 days! Winning.

What can cause delays at this stage:

• ⛔️ Slow property managers, and tenants delaying valuers access to the property.
• ⛔️ Contracts of sale that are incomplete, or missing information.
• ⛔️ Property valuation coming in at a reduced value
• ⛔️ Not ordering a valuation upfront

At Hunter Galloway we have access to upfront valuations through the majority of our lenders, so we know if there are going to be problems with the banks valuation before submitting your loan application. If you have had issues with your bank valuation, call our team to discuss your options on 1300 088 065 or get in touch now. Read More: How to Challenge a Bank Valuation  

Step #5: Unconditional approval… Also called formal approval

Expected duration: 3-5 days

Lenders give an unconditional approval once you have met all of the conditions and are satisfied that you qualify for the loan. In other words, your loan is approved without any further conditions! If you have a loan of over 80 per cent LVR, you will have to pay Lender’s mortgage insurance and also need to get your loan approved by the insurers. You want to make sure you have your unconditional approval before satisfying the finance clause on your contract.

How long does loan approval take?

Formal unconditional approval can only be done once the bank has verified all of your outstanding information, including the property valuation and can take between one day up to one week to complete.

What can cause delays at this stage:

• ⛔️ Home Loan being declined by the lender and needing to be sent to a new bank.
• ⛔️ Lenders Mortgage Insurers not accepting the property as suitable security

At Hunter Galloway we have access to 30+ lenders and banks across Australia, our Mortgage Brokers have a dedicated team of Credit Analysts to make sure we can find the right deal for you. If you have had your home loan declined, give us a call on 1300 088 065 to discuss your options or book a free assessment now. Read More: Loan declined after Pre-approval | 26 Techniques to get Unconditional Approval  

Step #6: Sign your loan documents

Expected duration: 1-3 days

Here’s the deal: If you want to get to settlement, you need to sign a few more documents. The question is: WHERE DO YOU SIGN?! After your loan has been unconditionally approved the bank will send your loan documents to you to sign. These documents can be a little complicated and include Loan Contracts, Mortgage Documents, Direct Debit forms, and a bunch of other stuff. The good news is that your Mortgage Broker will arrange a time to catch up and help you sign them.This also makes sure no signatures are missed, and your settlement isn’t delayed. If you are buying a home, you also want to get in touch with your solicitor or conveyancer at this point to double check that there aren’t any transfer or legal documents you need to sign before settlement.

What can cause delays at this stage:

• ⛔️ Loan documents incomplete
• ⛔️ Mortgage contracts incorrectly signed

At Hunter Galloway, we catch up with all of our clients to sign the loan documents. The majority of banks we work with allow us to print the loan documents in our office, so we check there is nothing missing before sending them back to the bank. Call us on 1300 088 065 or enquire online to see how we can help you to settlement. Read More: 5 Simple Steps to Settlement  

Step #7: Settlement!

Expected duration: 5-15 days

This step is the most exciting part of all. And if you are buying a home this is possibly the busiest part of the entire home loan process.

Loan documents are received by the bank

After your loan documents have been received by the bank, they will complete their certification to confirm everything has been signed correctly and go ahead with booking settlement. In other words: The bank dots the I’s and crosses the T’s. When you are buying a home, the bank will then get in touch with your solicitor, or conveyancer to let them know everything is good to go. Your solicitor or conveyancer will then arrange the settlement date. On the other hand, if you are refinancing a home your new bank will get in touch with the old bank to arrange a date for settlement.

When you are buying a new home

If you are buying a home, it is worth checking out our pre-settlement checklist. During this busy time it’s easy to forget to set up your mail redirection, get your internet changed or power connected before your actual settlement date! Yes, we’ve seen it happen!

Once all that is done…

You can sit back and wait for settlement. The bank or your solicitor will take over from here so you can chill and wait to hear from your Mortgage Broker who will confirm the exact date of settlement. The settlement will go through when your loan has been drawn down, and your Mortgage Broker will let you know as soon as the lender tells us. Congratulations you’ve made it through the entire home loan process! Read More: After Settlement, 7 Ways of Creating Home Equity [Faster]  

Step #8: Two weeks after settlement

Once your loan has settled, and all set up we’ll keep in touch to make sure your automatic loan repayments (also known as direct debits) are correct. At this stage, we’ll also find out if you have any dramas with internet banking, or offset accounts and make sure they are working how they should.  

Step #9: Annual review

At Hunter Galloway we will keep in touch with you each year on the anniversary of your settlement, to check you haven’t run into any dramas, review your loan and make sure everything is fine.

Ongoing Support

At Hunter Galloway, we provide ongoing support to our customers long after the settlement of a loan. We will monitor the value of your property, discuss any issues you might have had with the lender, provide guidance to fix the loan rate (or switch to a different home loan product), review your interest rates, and also help in changing the frequency of repayments. Read More: Pay Off Your 30 year Home Loan 6 Years Faster 🎉 [10 Easy Tips]  

Bonus: How long does a home loan application take?

After your Mortgage Broker has received your application and submitted it to a lender it can take between one hour to one week for the bank to complete your pre-approval. Your property valuation can take one day to one week, as well as the unconditional approval.

Bonus: How has COVID changed the way banks approve loans?

Getting a home loan during Covid isn’t impossible. We are still getting people’s loans approved everyday. But some people are finding it more challenging to get a home loan approved and these are some of the reasons.

• Working in specific industries.

With all the shutdowns, banks are being tougher on certain industries, specifically travel and hospitality. They are even flagging specific roles. So if you are a pilot for example the system will automatically flag you. In these instances, you might have to take extra steps, including getting a letter from your employer or just explaining your situation for example saying we are doing government contracts and my job hasn’t been affected during the pandemic.

• How you earn your income.

A lot of people that are earning commissions or bonuses or have massive overtime with their income might find that now the banks are only taking 60% of this income. Traditionally, before covid, they were taking 80%. So this is another massive reduction especially when you are looking at your borrowing capacity when the bank is really only going to accept 60% of this income.    

• If you are a ‘casual’ worker.

Before the pandemic, a lot of the banks treated casual and full-time employment pretty similarly. For example, if you had been working casually for the last three years, they would consider you to be basically full time. Now with covid, the banks are being critical and they want to see a big history, sometimes up to two years of your employment to make sure you can still afford that loan.In some instances, the banks are also saying they won’t lend more than 80% if you are casually employed and it’s certainly something that does change from bank to bank with some lenders being far more critical than others.

• If you are looking to buy land and build.

Lenders have actually reduced the maximum lend that they’ll do for certain things like construction. So if you are looking to buy land and build, some lenders are now saying that they won’t lend more than 90% of the property value including mortgage insurance where traditionally it was up to 95%.

• Guarantor loans.

We’ve had one lender flat out say they are not doing guarantees anymore. So this is something to be aware of especially if you’ve got mom or dad happy to go down as guarantor. You don’t need a deposit but there can be challenges with getting that across the line.

• Your existing account conduct.

Before the pandemic, the banks were pretty flexible on overdrawings. Now the banks look at this quite closely. If you’ve got any overdrawings on your day-to-day account – even if it’s only over by a few cents; any late payments on any credit cards or personal loans, this can all go against you. They do not like the look of even the smallest overdrawing. If you’ve got a late payment fee; the smallest amount will be enough to derail your home loan.    

• The banks are asking more questions:
  • How are you going to meet your lending obligations?
  • How’s your situation changed since covid?
  • How has covid affected your industry?
  • How has it affected your hours and if it has affected your hours?
  • What is gonna be the impact moving forward?

The lenders are wanting to understand if there is any foreseeable change in the future that might impact your ability to meet your obligations. It’s really important that you answer these questions truthfully.

Bonus: How can you make sure your loan gets approved?

• Income and employment.

Realistically, income and employment are the main concerns for the bank so the number one thing you can do if you receive a salary is to give the bank much more history of your employment and work over the last few years to give them confidence that stuff hasn’t changed and is going to be fine going forward. That’s the same thing if you have a consistent bonus. If the bank can see consistency over a long period of time, it gives them a lot more comfort around your income.    

• Job security.

You can show that you are really secure in your job and you are confident in it by getting a letter from your employer or from your boss explaining your hours, what they expect your hours to be going forward, how long you have been working there and what the conditions are. It’s not something that you necessarily need to do but it just gives the bank another layer of confidence that you are actually a really strong applicant.

• If you are a single applicant, try and increase your borrowing power as much as possible.

Let’s say you are going through an application by yourself, the bank is really concerned because there is only one income that they can rely on so if your income is lost, there is a chance that the bank could have impairments. So If you are putting the least amount of deposit for the most amount of money you can afford, the banks are more likely to knock that back. You can fix this by reducing things like your credit card or even closing your credit card, to increase your borrowing power so that if you are well under your borrowing limits, the bank can have more comfort around your position.

Bonus: Mistakes nearly all first home buyers make.

1. Thinking you need a 20% deposit. With the prices of houses right now, raising a 20% deposit can seem impossible, and most people just give up. However, all you need is to raise between 8-10% of the value, and you may be able to get a loan. But these low-deposit loans usually come with Lenders Mortgage Insurance.
2. Waiting (forever) to get genuine savings. Usually, banks want to see you hold at least 5% of the property’s purchase price in one of your bank accounts for at least a 3-month period – that’s genuine savings. The good news is some banks consider your rental history as genuine savings. Others even consider 5% of your deposit as proof of genuine savings.
3. Underestimating the cost of buying a house. In addition to your mortgage, there are about 10 other costs of buying a home. These costs can get to the thousands! For example, Stamp Duty can cost tens of thousands. Your mortgage broker can help you budget for these costs.
4. Not knowing who the real estate agent is working for. While real estate agents are generally friendly, remember that their job is to get the seller the highest price possible. They are not there to make sure you get a bargain! So tread carefully when dealing with real estate agents.

Overextending and getting the wrong home loan. This is a big one. Getting the wrong home loan can cost you thousands of dollars, and you might even risk losing your house. So you need a home loan expert who will make sure you get the loan that is right for you.

Speak to your Mortgage Broker team today

If you are looking for the best home loan or wanting to buy a home or refinance speak with one of our experienced mortgage brokers to walk through the next steps with you. At Hunter Galloway we help clients get The best Home Loans in this competitive market, we give you the actual strategies that have helped other home buyers like you secure a property when there have been 5 other offers on the table! Enquire online or give us a call on 1300 088 065.