It’s time to begin house hunting, but where do you start? What kind of house can you afford?
Buying a house is an exciting time, so don’t let the process overwhelm you. By using a mortgage broker’s services, you can be on your way to home ownership even quicker than you’d imagine.
There are 3 main phases in the application process:
- Understanding your Finances
- Application Process
- Pre-approval & Settlement
How do you work out what you can afford before you apply?
Start by mapping your income, expenses and deposit against what lenders will actually count. A broker works out your borrowing capacity from your situation, needs and objectives, not from an online estimate. The figure moves with rates, your debts and the lender, so treat any number as a starting point.
Understanding your finances and what is required for a home loan approval can be confusing.The best place to begin when looking to undertake a home loan would be to speak to a mortgage broker. They work on your behalf to find the most suitable home loan for your needs. Together they’ll work with you to understand your situation, your needs and your objectives for getting a home loan.
What happens when your home loan application is submitted?
Your broker prepares the documents the lender needs, calculates how much you can borrow, and puts the available loan options in front of you. You choose one together, and the application goes to that lender. Preparing it properly reduces avoidable delays, but it does not guarantee the lender will approve it.
A mortgage broker will help you prepare all the correct information and documents required in order to maximise your chances of loan approval with minimum difficulty. As part of your assessment, your amount you’re allowed to borrow will be calculated. Your broker will present you with available loan options and together you can choose the most suitable option for you. Your application will then be submitted to the lender.
What is the difference between pre-approval and formal approval?
Pre-approval, also called conditional approval, means you have met most of the lender’s requirements but not all of them. Formal approval comes once you have chosen a property and the lender has everything it needs. Only then does the loan contract arrive and the funds become available to settle.
After your application has been submitted, you’ll be informed if you’ve received a conditional approval, also known as a pre-approval. This means that you have met most of the lenders requirements for a home loan.
When you have chosen your property and the lender has everything they need, they will provide you with a formal approval and send over your loan contract. Loan funds can then be advanced and made available to you to secure your property.
What does your broker do after the loan is set up?
Your broker contacts you once the loan is running to check you understand the terms and conditions and how to make repayments correctly. If something changes later, or you want another product looked at, that is the same conversation. It is easier to ask than to work out a loan contract on your own.
Your mortgage broker will contact you after your loan has been set up to make sure that you understand the loan’s terms and conditions and how to make the repayments correctly. If you require any additional services, your broker can help you make an informed decision or answer any questions you may have.