How buyers can fast track home loan approval

 Walking through real estate listings and picturing yourself in a home is arguably the most fun part of purchasing property. But getting to this stage may take a little bit of time and a whole lot of paperwork.

There are a few factors that would-be borrowers may need to consider before they begin their home loan journey. All of which may affect the time it takes to get full home loan approval.

So, how long exactly does it take to go from would-be buyer to homeowner? And is there anything you can do to speed this up?

Before you begin your home loan application

Assessing your own financial health ahead of time may save you days, if not weeks, and prevent you from applying for the wrong home loan and being rejected. Firstly, you’ll want to calculate how you will afford the property – deposit and all. You may want to take some time to set a budget to get your finances on the right track before you apply.

If you’ve got existing debts, like outstanding credit cards, it may be worth paying this off sooner rather than later. And if you’ve got a frivolous spending habit, now is the time to cut out takeaway food and online shopping ahead of the application. Anything that could add to your ongoing expenses may reduce the loan amount the lender will approve you for.

Next, you’ll also need to take the time to save a deposit. It’s generally recommended you save a deposit of 20 per cent to avoid costly Lender’s Mortgage Insurance (LMI). You may also gain the added benefit of qualifying for the lender’s more competitive loans, as many lenders reserve their lowest interest rates for borrowers with smaller loan-to-value ratios.

Saving for a deposit of this size can be difficult, especially in Australia’s capital cities. Government assistance is available for some first home buyers to get them over the line with a deposit as little as 5 per cent. If you’re not sure how to save up for a deposit in 2021, check out Reduce Home Loan’s First Home Buyers Guide.

Finally, there are some general regulations that Australian lenders enforce. Most home loan lenders require applicants to meet the following criteria:

  1. Aged 18 or over
  2. An Australian citizen or permanent resident
  3. Steady employment – your application may be looked on more favourably if you’re full-time employed for at least 6 months with one company.
  4. Meet or exceed an income minimum to service the loan size you require
  5. Have a good to excellent credit score

While there are exceptions to some of these, such as low-doc home loans typically being a better suit for sole traders and part-time employees, most home loan lenders will require you to tick these boxes. This means if you’ve just started a new role you may want to consider holding off on your application for a few months, or if you have a poor credit history, take some time to improve it first.

Stages of getting home loan approval

Now your finances are in order you’re ready to start the stages of applying for a home loan and getting full approval.

1. Research (a few hours to several days)

There are more home loans available in the Australian market than the one your childhood bank is offering. By not shopping around you may be missing out on lower interest rates, fewer fees, more features, and better customer service.

To speed up this step, it’s worth using comparison websites and talking to experts, like Reduce Home Loans’ customer service team, to get as much information as possible about the right loan for you.

2. Documentation (a few hours to several days)

The home loan application will require you to provide personal identification, income information, bank statements, evidence of assets and more.

To speed up this step, try to gather your documents ahead of time. If you’re making an online application, look for document-scanning phone apps to quicken this process.

3. Pre-approval (minutes to a few days)

Now is the time to provide the lender with all your documents and fill out your application for pre-approval. Try to only apply for one loan at a time as multiple home loan applications will show on your credit history and may hurt your chances of approval.

4. Lender valuation (1-3 business days)

Once you’ve found the right property and you’ve made an offer, the lender may require their own valuation of the property to determine your LVR and ensure you’re borrowing the right amount.

Not all applications will require their own valuation. To skip this step, you may want to check with your chosen lender if the private valuation performed in the property sale process will suffice.

5. Unconditional approval (4-14 business days)

You’ve made an offer on the property and our new lender has accepted the valuation. The lender will now fully assess your documentation and personal information to ensure you can service the home loan.

To speed up this process, ensure you’ve been truthful in your application, have provided all the correct documentation and have met all the lender’s eligibility criteria (found on their website).

6. Settlement (30 – 90 days)

Once you’ve received unconditional approval and signed the Contract of Sale, you will set a settlement date for the property purchase. This is generally around 30 to 90 days depending on the needs of the seller (e.g., waiting for new property purchase to settle or renovations to finish) and the buyer (e.g., waiting for old property to sell to fund the sale).

If you want to speed up the settlement process, you’ll need to have this approved by the seller as well. If you’ve contracted a solicitor or conveyancer, they may assist in this request.

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If you’re hoping to fast track the entire home loan process, there are a few things you can do, including organising your documents ahead of time, using online application platforms, skipping lender valuation, and requesting a short settlement date. And if you’re able to do all of that, there’s no reason a borrower may not be able to get home loan approval in several business days.

For more information or to speak to someone for some advice on streamlining the application process, reach out to our friendly Personal finance Managers.

(29)    For the Rate Cutter Variable where the borrower pays $1170 upfront fees then a corresponding loyalty discount of 0.10% p.a. off the Rate Cutter Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(27)    For the Investor Rate Slasher Cash Back Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Investor Rate Slasher Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(26)    For the Low Rider Cash Back Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Low Rider Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(25)    For the Economizer Cash Back Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Economizer Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(24)    For the Super Saver Cash Back Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.10% p.a. off the Super Saver Cash Back Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(23)    For the Super Saver Variable where the borrower pays an upfront fee of $1170 then a corresponding loyalty discount of 0.15% p.a. off the Super Saver Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(22)    For the Economizer Variable where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.11% p.a. off the Economizer Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(21)    For the Investor Cash Back Hero Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Cash Back Hero Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(18)    For the Home Owners Dream 1 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Home Owners Dream reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(20)    For the Cash Back Hero Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Cash Back Hero Variable (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(14)   For the Investor Rate Slasher where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.09% p.a. off the Investor Rate Slasher rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(12)   For the Investor Rate Lovers Interest Only where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.07% p.a. off the Investor Rate Lovers Interest Only rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(11)   For the Wealth Maximizer 3 year fixed Principal & Interest where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Wealth Maximizer reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(10)    For the Wealth Maximizer 2 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Wealth Maximizer reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(9)    For the Home Owners Dream 3 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Home Owners Dream reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(8)    For the Home Owners Dream 2 year fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the Home Owners Dream reverted variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(7)    For the Investor Rate Slasher where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.09% p.a. off the Investor Rate Slasher rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(6)    For the Investor Rate Buster Variable where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.08% p.a. off the Investor Rate Buster Variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(5)    For the Rate Buster Variable where the borrower pays an upfront fee of $150 then a corresponding loyalty discount of 0.05% p.a. off the Rate Buster Variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(4)For the Rate Slasher Variable where the borrower pays an upfront fee of $1,170 then a corresponding loyalty discount of 0.08% p.a. off the Rate Slasher Variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.

(3) For the Investor Rate Lovers Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Investor Rate Lovers Variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(2)For the Rate Lovers Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Rate Lovers Variable rate (at that time)  will automatically apply after the 5th anniversary of the loan.  These fees and loyalty discount are factored into the comparison rate.  The loan setup fees are not refundable.

(1) For the Low Rider Variable where the borrower pays $0 upfront fees then a corresponding loyalty discount of 0.06% p.a. off the Low Rider Variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.

(28) For the Rate Crusher 1 Year Fixed where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.05% p.a. off the Rate Crusher reverted variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.

(19) For the 1 Year Fixed Wealth Maximizer where the borrower pays an upfront fee of $697 then a corresponding loyalty discount of 0.20% p.a. off the 1 Year Fixed Wealth Maximizer reverted variable rate (at that time) will automatically apply after the 5th anniversary of the loan. These fees and loyalty discount are factored into the comparison rate. The loan setup fees are not refundable.