| We understand that process of applying for the loan can be confusing. Here we try to demystify the entire process
Step One: Initial Consultation During the initial consultation, your Central Choice broker will work to understand your needs completely and have a clear understanding of your short, medium and long term needs, before developing the appropriate funding solution for your circumstances. This will include analysing the structure of your funding to determine if you require a fixed interest rate, variable rate, split loan, offset facility, redraw facility, whether the loan involves multiple securities, and ways to avoid Lender's Mortgage Insurance (LMI) Estimated timeframe - allow 2 hours
Step Two: Preparation of Your Loan Application Your Central Choice broker will collect your personal information and supporting documentation and prepare your application for lodgement at your chosen lender. Obviously, your privacy is of paramount importance to us and your personal information will not ever be disclosed to any other third party without your express authorisation. For more details, please check our Privacy Statement Estimated timeframe - allow 24-48 hours for full lodgement
Step Three: Conditional Approval Your loan has now been submitted to the bank. If the application passes the bank's credit assessment, you will then be issued a Conditional Approval (also known as Approval in Principle, or Approval Subject To). What this means is that your application has fulfilled the bank's credit criteria, but may need more information from external sources in order to fully approve the application. An example of this would be a valuation. For example, according to a particular lender's policy, you may only be allowed to borrow 90% of the value of your property. You may have an estimation that your property has a fair market value of $500,000. Therefore, at this particular lender, you would be able to borrow $450,000 ($500,000 x 90% = $450,000). Again, if this passes the bank's credit assessment, you would be issued a Conditional Approval. However, this is only subject to your property being valued at $500,000. If, for instance, the valuer was conservative, and your property was only valued at say, $450,000, you would only be able to borrow $405,000 ($450,000 x 90% = $405,000). Note that the valuation is usually an independent organisation not controlled by the bank. Therefore, even though the bank may approve your loan in principle, it is still subject to the valuation. Estimated timeframe - 3-5 days
Step Four: Unconditional Approval
After the bank has received and verified the valuation, and once all other conditions have been satisfied, the bank will issue an Unconditional Approval. This is where the bank has formally or unconditionally approved your loan. That is, they have formally committed to providing you with the finance, or are satisfied that no other conditions need to be met in order to advance the funds to your account! Estimated timeframe - 72 hours (add a further 48 hours if lender's mortgage insurance is required)
Step Five: Documents Issued Documents will now be issued to you or your broker. For real estate mortgages, you will received documents such as
You will also receive a copy to keep for yourself. We would highly recommend you have your solicitor or financial planner review these documents with you to ensure that you understand all of the terms and conditions in the loan documents. You should have these documents signed and witnessed by an adult over 18 years of age who is not a party to the loan transaction. Estimated timeframe - 2 days
Step Six: Document verification The bank usually requires the documents to be returned to them at least 4 days before settlement to verify all of the documents. Once they receive these documents, they will commence the process of opening your accounts, and set up internet banking facilities, credit cards, etc. Estimated timeframe - 24 hours
Step Seven: SETTLEMENT Congratulations! This is the big day. Your solicitor/conveyancer will advise you how much additional money you will need to provide, if it is the case that there is a difference between the amount of money that you are borrowing with the purchase price. There will generally be a settlement meeting taking place between your bank, your conveyancer, the vendor's solicitor, and the vendor's bank, if the vendor currently has a mortgage on there. The vendors bank will be there to ensure sufficient funds are available to clear the existing loan, and the vendor's conveyancer ensures that the remaining money goes to their client. Your conveyancer and bank attend to hand over the required funds, which includes the purchase price less any deposits paid, and also any adjustments. Generally settlements take place in the afternoon, and you are able to collect the keys to your house when settlement is confirmed to have taken place.
Step Eight: Post Settlement At Central Choice, we believe that your relationship with us starts after the loan settles, whereas most brokers will have you believe that when your loan settles, your relationship is over. We will within the first week of settlement sit down with you to make sure that all your accounts are set up correctly, and we will ensure that your offset account is linked to your home loan so that you are obtaining the benefits. We will also ensure that your salary is being paid into the right account to pay off your loan as fast as possible, and attend to any direct debit requests that you may need to get set up. We aren't going anywhere, so feel free to call us at any time during the whole stage of your loan and we will happily answer any of your queries throughout. This may include you wanting to get a free valuation on your property, or you may want to talk strategy on how to maximise the value of your property before you consider selling. |
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The Loan Application Process
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