Explaining The Home Loan Process
A guide to what’s involved in taking out a home loan - start to finish.
Talk to us, it costs nothing to speak to a friendly and Local Mortgage Specialists broker, who can quickly help find out how much you can borrow and which loan may suit your needs, plus answer any questions about the process.
How does the process work?
Finance First - Arrange a pre-approved loan If you haven’t started your property search, or are still looking, it's importnant you know what your finance situation is first – so a pre-approved loan can be useful. It gives you a clear picture of what you’re spending limits are and gives you peace of mind that if you find a property you really interested in you can move quickly to make an offer. And it may put you in a stronger negotiating position than other potential buyers who don’t have pre-approval. Local Mortgage Specialists can take care of the paperwork to lodge a loan application.
Find your property Make sure you do plenty of homework when you’re on the hunt for a new property. Research property prices in the area, potential capital growth and existing and planned infrastructure, such as roads, public transport, schools and shops. If you’re unfamiliar with property values in the area, consider a full valuation carried out by a registered valuer before making a final decision.
Make an offer and sign a Contract of Sale Whether you buy property at auction or make an offer on a listing, your agreement with the vendor only becomes a legal commitment when a Contract of Sale/Offer of Acceptance has been signed by both parties. This contract will confirm the selling price as well as any terms and conditions. Your commitment will usually be subject to lender approval, a building inspection report and a pest inspection.
The period from signing an Contract of Sale to Settlement – when the property becomes legally yours – is usually around six weeks. This includes a 28 day finance clause and 14-21 day settlement (from the date full finance approval is obtained) Note: even if you have a pre-approved loan, your lender will still need to complete a valuation of the property you have chosen before issuing full approval.
Pay a deposit A deposit is required once a Contract of Sale has been signed by both parties (sometimes called ‘exchanging contracts.’) Your deposit is a nominal amount – usually between $1,000 to $5,000 – to “hold” the property. This initial deposit is different to your “total” that will be required as part of your finance to purchase. Speak to Local Mortgage Specialists about your deposit options.
Finance Your Local Mortgage Specialists broker will finalise your finance. If you had a pre-approval in place, they will arrange the formal approval or will prepare a full finance application.
Local Mortgage Specialists will guide you through the whole process, collect all your information and data, and deal directly with the lenders.
Full finance approval should take between 3 to 10 days depending on which lender is chosen.
Appoint a conveyancer You will need a solicitor or conveyancer to check the legalities of the Contract of Sale. Your conveyancer will also check all rates and taxes have been paid, check land use or building approvals for the property and order any relevant searches. They may also help sort out any inspections.
It's recommended your conveyancer is independent of the sale and has no connection or relationship to the real estate agent – remember your conveyancer acts for your, the Real Estate agent acts for the seller.
Your conveyancer will also collect, usually 3-5 days before settlement, your remaining deposit/contribution for the sale (separate to the initial deposit to the real estate agent).
On settlement day, the conveyancer will check the correct amount of money has been transferred from your lender to the seller and all fees – such as Stamp Duty – are paid, so you can take legal ownership of the property.