How do I apply for a home loan?

 

There are two main ways you can apply for a home loan:

  • Directly to a bank – at a branch, online or via a comparison site

  • Via a mortgage broker

However, it could be a wise idea to research what home loans are available on the market and what type of loan could suit your circumstances. There are many factors to consider when selecting the right home loan to apply for, including:

  • Interest rates – questions to ask could include how much interest the bank will charge, whether the rate will change (variable rate) or be fixed for a period of time and whether the rate is competitive with other rates on the market

  • Features of the loan – considerations include whether the loan gives you the option of setting up an offset account or redraw facility, whether you can vary payments easily and whether the balance is accessible online

  • Duration (term) of the loan – how long will it take to pay it off, and what happens if you decide to pay extra

How hard it is to get a home loan can depend on many factors, including how much you need to borrow, your repayment capacity and the economic environment. For example, recently some banks have tightened up their lending criteria, which means that they have introduced more checks and requirements when deciding whether to grant someone a loan.

Additionally, some banks are also requiring people to provide extra information about their employment stability, now and in the future, due to the COVID-19 pandemic.

When you have completed all of the application requirements, typically your lender or broker will keep in contact with you about its progress. It could be a good idea to make sure that the bank is aware of any finance clause in your contract, and when it expires. Typically, your conveyancing solicitor will be able to help you navigate through this area.

If you are approved for the loan, the lender will typically issue you an official document (the home loan contract) that states the conditions of the loan. This would typically be forwarded to the seller’s solicitor (usually by your solicitor), which would mean that the finance clause of the contract would be met. The lender then has a set amount of time (as detailed in the contract) to settle the loan (or to provide the funds to the seller and activate your home loan). Seek professional advice.