Preparing your documents

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The first step in the assessment process is gathering all the required documentation and completing a fact find. This is used to determine your personal and financial situation, and what your goals are.

You will also need to include ID, payslips and bank statements.

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Preliminary assessment

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Once all the information has been gathered, it is possible to determine whether there are any issues that need to be addressed, and it also provides an opportunity to look at potential lending options.

If there are problems, for example, with your credit history, this can be addressed at this stage.

It is also possible to get a clearer idea of how much you are going to be able to borrow.

At this stage, a broker will liaise directly with a number of lenders to ascertain the likelihood of getting a loan, before the application is submitted. This is critical, as it protects your credit rating.

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Submission to a lender

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Once the best option has been determined, and there is a high probability that your application will be successful, we can submit the documents directly to the lender.

The lender will assess the loan and notify you if they require any further documentation.

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Conditional Approval

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If successful, you will be notified of your conditional approval. This means that the lender is prepared to give you the loan, assuming that you satisfy a number of conditions.

Most commonly, this will be based on the property itself, and that it meets the requirements fora suitable bank valuation. There could also be other conditions, based on the type of property and also the location. Many lenders have postcode restrictions, whereby they will only lend up to a certain amount for particular areas. For example, Sydney CBD or Paramatta. These locations are normally considered higher risk areas. Some mining towns or regional areas might be included here.

Similarly, lenders have issues with high-density apartment buildings with more than 30 units, as they represent a higher risk.

A conditional approval (also known as a preapproval) normally lasts three months, after which you will need to supply updated income details, such as new payslips. It is important to note that if you are going to exceed the 90-day limit, you need to ask for an extension prior to expiry, or you will need to start a new application.

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Valuation

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Once your offer has been successfully accepted (subject to finance) you can order a bank valuation.

A lender will normally order a full valuation, but one of three different types of valuations is possible.

A desktop valuation is done like an online assessment, without ever visiting the property. A lender would only accept this on a lower-risk property. A curbside valuation occurs when the property is visited in person, but the valuer is unable to access the actual property, as it might be tenanted or run down. The most common valuation is the full valuation, where a valuer gets full access to the property, in order to inspect it and compile a full report.

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Unconditional approval

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When all the conditions of your loan are met, the lender will issue you with a letter stating that you have unconditional approval.

If you need any further documentation at this point, you can now submit it, or if you have to pay Lender’s Mortgage Insurance, this is the time to do so. Otherwise, the lender will issue you with the loan documents for formal signature.

Loan documents/ Letter of offer

Traditionally, loan documents are delivered in hard copy form, through the mail, and also by email. However, many lenders are using digital formats more and more.

Insurance

The homeowner is required to have building insurance, and the lender will be able to supply you with a list of providers. For a freestanding, detached property, such as a house, it is the responsibility of the owner to obtain building insurance. For units, townhouses and villas, building insurance is often included as a part of their body corporate or strata. A certificate can be obtained from the strata manager. Insurance premiums are paid monthly or annually.

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Settlement

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Once all the documents have been received and formalised, settlement can take place.

Your settlement agent, conveyancer or solicitor will be able to handle the details of the settlement directly with your lender.

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