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What happens when you submit a home loan application and why does it all take so long (part 1)

Buying property and applying for a home loan can be an emotional time for people. As mortgage brokers, we regularly meet customers who have found their dream home and need to get their home loan organized as quickly as possible. As we count down to settlement, common questions that come up are:


By Trent Winstanley, Mortgage Choice Broker in Adelaide and Fairien Azeem, Mortgage Choice broker in Liverpool, Sydney

Content reviewed and updated April, 2014

Buying property and applying for a home loan can be an emotional time, especially first home buyers. As mortgage brokers, we regularly meet customers who have found their dream home and need to get their home loan organised as quickly as possible. As we count down to settlement, common questions that come up are:

  • What's going on with my home loan application?
  • Why is it taking so long?

In this post, we explain what goes on behind the scenes between the lender and your mortgage broker to shed some light on all this secret home loan business!

Submitting the application

As soon as the meeting with a customer is over, we'll get right on to submitting the home loan application and if applicable, the First Home Owner Grant application too. This is generally done online and to ensure this step is completed as efficiently as possible, we need to have all the right personal information from our customer like:

  • Personal ID including driver's licence
  • Financial information – income evidence, copies of bank statements, details of existing financial commitments. This is why your broker may ask you to fill in a fact find form with all of your information, prior to your appointment.

Once the home loan application has been submitted, it generally takes the lender two to three days to process the application and come back to us with an initial response. This response could be an indicative or conditional approval or a request for missing information.

The main reasons the approval process can be held up at this stage include:

  • Additional documents are required
  • Further confirmation is needed
  • Details such as names and/or other information is inconsistent

Given that the lenders need to be absolutely sure you can afford the home loan, they need to receive all the paperwork they require. Requests for further clarification on something or some extra documents could mean the approval process is delayed.

Keep in mind that the time it takes to process a home loan application is different across the various lenders depending on:

  • The time of year – traditionally the periods close to Christmas, Easter and the end of the financial year tend to be busier.
  • The complexity of the application
  • Whether the lender needs additional paperwork
  • The volume of mortgage applications currently being assessed by the lenders
  • Lenders Mortgage Insurance (LMI) requirements

One of the benefits of dealing with a mortgage broker is we know when a lender is having an unusually long delay in their processing department. Therefore, if one of our customer's needs a fast home loan approval, we can usually recommend a lender with a similar home loan product that is likely to be able to provide the approval within the required time frame.

In part 2 of this post, we continue our explanation on why it takes so long for a home loan approval to take place, including: property valuation, loan offer documents and what happens when it's settlement time.

In the meantime, you can book an appointment with a mortgage broker today to find out more about your options.

If you have anything to add or have any other questions regarding what happens when you see a broker then leave us your comments below.

Posted in: Archive

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