Over two million Australians own a second property. Some do it to invest in real estate and increase their wealth, while others simply want to improve their lifestyle with a holiday home. Whether you share the same sentiment or not, purchasing a second home is a huge decision not to be taken lightly. Continue reading […]
What to Know About the Home Loan Approval Process
Understanding the home loan approval process and knowing what to do at each stage can make it less intimidating. Today we’ll guide you through the stages, including what to do before lodging your application, when to apply, important considerations, and the support and tools available to make the process smoother.
Before You Apply: What You Need to Know
Before diving into the application process, it’s crucial to get your ducks in a row:
Check Your Credit Score
When considering your home loan application, lenders will assess your credit score, also known as your credit rating. This score is determined by factors such as your borrowing history, previous credit applications, and any missed payments on credit cards, bills, or loans. You can contact credit reporting agencies like Equifax or Experian for your free credit report and address discrepancies as early as now.
Understand Your Borrowing Capacity
Use online calculators to estimate how much you might be able to borrow based on your income and expenses. Do you have any unpaid huge debts like personal loans or significant credit card balances? Explore multiple ways to reduce them before applying for a home loan, as they could impact your ability to borrow.
Save for a Home Loan Deposit
The optimal home loan deposit amount can be influenced by various factors, but make it a target to save at least a 20% deposit to avoid a Lender’s Mortgage Insurance (LMI). However, some lenders offer options with as little as a 5% deposit.
Gather Necessary Documents
Lenders often require documentation to assess your financial standing. So, before lodging your loan application, prepare pay slips, tax returns, bank statements, and identification documents. Having these ready can speed up the process. If you are self-employed, it’s important to track your income and ensure your tax returns are up-to-date and accurate. This will help provide a clear picture of your income and solidify your credibility as a borrower.
When It’s Time to Apply: Things to Keep in Mind
As you move forward with your home loan application process, consider these points:
Explore Different Home Loan Products
Research different home loan structures, types and features to find what suits your needs. For instance, if you prefer stability and predictability in your mortgage payments, your best bet might be a fixed-rate loan. On the other hand, if you’re open to market-driven changes and are comfortable with the potential for both advantages and uncertainties, a variable-rate mortgage could be a good fit. Alternatively, you can consider a split loan, which combines the stability of a fixed loan with the flexibility of a variable home loan. For home loan features, read up about redraw vs offset to ensure you secure the best mortgage product.
Get Pre-Approval
There are two good reasons you should get pre-approval for a home loan. One, it provides a clear picture of your borrowing capacity. That enables you to search for a property that fits your budget. Second, with a pre-approval, you get to show sellers you’re a serious homebuyer. Learn more about pre-approval through our previous blog titled “Top Six Things You Need to Know About Pre-approval for Loans.”
Consider Engaging a Mortgage Broker
While you can apply for a home loan on your own, there’s more value in engaging a mortgage broker. They can help you navigate the process and potentially give you access to a wider range of loan options. You can count on them to handle the entire application process and inform you if any additional documents are required.
We recommend hiring a local mortgage broker; they have invaluable insights into the local property market and an extensive network of lenders and professionals you may need during your home-buying process. More importantly, the best mortgage brokers in Hobart, Launceston or Devonport can do all the crucial legwork for you.
How Long Does Finance Approval Take?
The timeline for home loan approval can vary:
- Pre-Approval: Usually takes one to three business days.
- Full Approval (also known as Unconditional Approval): This can take 5 to 14 business days, depending on the lender and your circumstances.
Factors that can affect the timeline include:
- The complexity of your financial situation
- Completeness of your application
- Lender’s current workload
- Property valuation process
For more information on the home loan approval timeline, check out our previous insightful blog about this topic: “How Long Do Home Loan Approvals Take?”
Take Your Next Steps with Deltos Finance
At Deltos Finance, we pride ourselves on having one of the highest home loan approval rates in Australia. Our expert mortgage brokers in Hobart are ready to guide you through every step of the process, from pre-approval to settlement.
Every borrower’s situation is unique, so we’re committed to finding the right loan solution for you. With our extensive network of lenders & in-depth market knowledge, we can help streamline your application and boost your chances of home loan approval.
Reach out now, and let’s make your home loan process smooth and successful!
Enquire Now
Find Your Perfect Finance Solution
Let's discuss your finance needs. We’re here to help.
More posts from Deltos Finance
![deltosfinance blog pictures (1) Top view of a property development site](https://deltosfinance.com.au/wp-content/webp-express/webp-images/doc-root/wp-content/uploads/bb-plugin/cache/deltosfinance-blog-pictures-1-1024x576-square-68feddbc5f110af256c48b9458629389-.jpeg.webp)
Bridging the Gap: Bridging Loans for Property Development
In property investment, timing is everything. Whether you’re eyeing a prime development opportunity or planning to flip houses to upgrade your portfolio, the ability to move quickly can make all the difference. This is where bridging loans may come into play. They offer a fast, flexible financing solution to bridge your financial gap between property […]
![A local mortgage broker shaking hands with a client.](https://deltosfinance.com.au/wp-content/webp-express/webp-images/doc-root/wp-content/uploads/bb-plugin/cache/stock-photo-close-up-of-business-people-handshaking-square-938cfde32195ad771c81ca9c8367fad4-.jpg.webp)
Maximising Your Local Mortgage Broker Relationship
Whether buying your first or second home or investing in multiple properties, having a trusted local mortgage broker by your side can make all the difference. The right financial guidance and local insights can point you in the right direction and make your real estate decisions pay off. You can get better results if you […]
![HOBART, AUSTRALIA, FEBRUARY 22, 2020: Elizabeth Street Pier in H Buying a holiday house in a tourist spot like Hobart can be a good move.](https://deltosfinance.com.au/wp-content/webp-express/webp-images/doc-root/wp-content/uploads/bb-plugin/cache/stock-photo-hobart-australia-february-2020-elizabeth-street-pier-hobart-australia-square-f850196006b9de1f017197902af149c7-.jpg.webp)
Buying a Holiday House: Holiday Let vs Buy-to-Let
It is incredibly enticing to escape to a cosy beachside retreat on weekends or stay in a charming mountain cabin during the holidays. Owning a holiday house is a dream for many Australians; it can also be a savvy investment strategy. However, deciding whether to use your vacation home as a holiday let or a […]
![buying a second home buying a second home](https://deltosfinance.com.au/wp-content/webp-express/webp-images/doc-root/wp-content/uploads/bb-plugin/cache/buying-a-second-home-1024x576-square-bb64d5efdee688b6f6ee3cc6ebf8e9a3-.jpeg.webp)
Is Buying a Second Home Right for You?
The idea of owning a second home can be incredibly appealing. It could be a holiday house or an investment property that can generate additional income. But is buying a second home the right decision for you? Let’s explore the key considerations and steps involved in purchasing a second property in Australia. Top Reasons for […]
![stock-photo-modern-australian-family-house A house in Australia can have equity over time.](https://deltosfinance.com.au/wp-content/webp-express/webp-images/doc-root/wp-content/uploads/bb-plugin/cache/stock-photo-modern-australian-family-house-square-0249eaa964146a7d3824ea0b83ab2568-.jpg.webp)
How to Use Equity to Buy Another Property
As a homeowner, you’re sitting on a valuable asset that can do more than provide a roof over your head. Your property’s equity can be a powerful financial instrument to help you buy a second home or expand your real estate portfolio. So, whether you’re dreaming of a holiday home by the beach near Carlton […]
![cash out refinancing cash out refinancing](https://deltosfinance.com.au/wp-content/webp-express/webp-images/doc-root/wp-content/uploads/bb-plugin/cache/cash-out-refinancing-1024x576-square-192f22c0c8b7d4d3db74735b4ecfcc53-.jpeg.webp)
Cash-Out Refinancing: Tapping into Home Equity
As a homeowner in Australia, you may have built up significant equity in your property over the years. But did you know you can tap into this equity to access cash for various financial needs? This is where cash-out refinancing comes into play. In this article, let’s explore what cash-out refinancing is, how it works, […]
![stamp duty exemption stamp duty exemption](https://deltosfinance.com.au/wp-content/webp-express/webp-images/doc-root/wp-content/uploads/bb-plugin/cache/stamp-duty-exemption-e1719883098532-1024x895-square-69d16bc493ccc430d5922ecf5c4246c5-.jpeg.webp)
No More Stamp Duty: Tasmania’s Gift to New Homeowners
Imagine stepping into your first home without the burden of thousands of dollars in stamp duty. Sounds too good to be true? Well, for Tasmanian first-home buyers, this dream has now become a reality. The Tasmanian government has just delivered a game-changing gift that could save you up to $28,945 on your first home purchase. […]
![shared equity scheme shared equity scheme](https://deltosfinance.com.au/wp-content/webp-express/webp-images/doc-root/wp-content/uploads/bb-plugin/cache/shared-equity-scheme-1024x576-square-84afdf75e68901cc62edf3cfbbdb1008-.jpeg.webp)
The Australian Shared Equity Scheme Explained
These days, it’s not easy to break into the property market. That’s especially true for young and first-time homebuyers who encounter several obstacles, especially amidst rising inflation and interest rates. But don’t fret because there are ways to make homeownership more accessible and affordable. One of which is shared equity. The Australian shared equity scheme […]
![rentvesting rentvesting](https://deltosfinance.com.au/wp-content/webp-express/webp-images/doc-root/wp-content/uploads/bb-plugin/cache/rentvesting-1024x576-square-19cc50a12fbcfd9663f1326de4b26ef8-.jpeg.webp)
Let’s Talk About Rentvesting in Australia
You might find the traditional path to homeownership challenging, especially with rising property prices in desirable areas. Plus, it usually takes an average Australian over five years to save for a home loan deposit for a median-priced residential property. Enter rentvesting—a strategic approach for getting a foot on the property ladder without compromising your lifestyle. […]