11 SepDemystifying the Home Loan Process

houseBefore you head out to hunt for a new family home or investment property, take a bit of time to get your home loan sorted first. If you’re like most people, it can feel as though banks make you jump through hoops to get your mortgage approved. However, there are some quick steps you can follow to make the home loan process easier.

Step One: Ask for Advice

Your local bank might be a good starting point, but how will you know you’re getting the most competitive interest rate or the right loan type to suit your needs? It pays to ask a mortgage specialist for advice about the different interest rates and loan types on offer from a variety of banks and other lenders.

Be sure to ask plenty of questions. After all, it’s your home loan so it’s in your interest to be sure you get the answers you need.

Step Two: Get Your Documentation Together

Before you rush into your local bank branch, take the time to get your documentation together. Remember, the bank assesses your ability to repay the money you borrow based on the information you provide them.

You’ll need to provide at least two current payslips and last year’s tax assessment notice to verify how much you earn. If you earn any other types of income, you’ll need to provide evidence of that too.

If you’re buying your first home, the bank may ask to see bank statements proving your savings history. Alternatively, if you’re refinancing an existing home loan from another bank, the new lender may want to see statements showing that you’ve kept up with all of your repayments.

Step Three: Choose the Right Loan Type

Once your documentation is in order, it’s time to check that you have the right loan type to suit your financial goals and your individual circumstances.

If you’ve taken the time to ask for advice from a mortgage specialist, you’ll already know whether you want a fixed rate home loan or whether you’d prefer a variable interest rate with a linked offset account.

You should also have a fair idea whether you’re getting a competitive interest rate compared to what else is available from other lenders. There’s also the decision of whether you want your mortgage repayments on principle and interest payments each fortnight or on interest only payments once a month.

Step Four: Check Your Borrowing Capacity

Before you submit your loan application, it’s a good idea to check how much you can borrow. Just as different banks offer a range of differing home loan options, they also have varying policies for how they work out your borrowing capacity.

Your mortgage broker will use the income documentation you provide to work out how much you can borrow from a range of different lenders. Some may allow you to borrow more than others, so it’s worth checking whether the bank you want to use will give you the loan amount you need.

Step Five: Choose the Right Lender

Aside from using different policies to work out how much you can borrow, different banks also have varying home loan options, so it pays to choose the right one to suit your needs. For example, some banks may require you to put down a larger deposit on your home purchase than others. Some may not offer all of the home loan features you want, while others may have additional fees and charges you didn’t expect.

Step Six: Apply for Pre-Approval

Submitting an application for a pre-approval is a great way to make the process a little easier for you. The lender you choose will assess your application and let you know that you’ve been conditionally approved to borrow a specified amount of money.

Once you receive your pre-approval, you can go house hunting with confidence.

If you’re ready to start the home loan process, why not call us and speak to a good mortgage broker about your options today on 1300 832 554 or click here.

Rick Nieuwenhoven
E: rick@nieuvision.com.au

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Disclaimer: We recommend that you seek independent financial and taxation advice before acting on any information in our articles and newsletters. They contain general information only and have been prepared without taking into account your personal objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. Interest rates are subject to change without notice. Lenders terms, conditions, fees & charges apply.

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