Why You Need to Chill When Applying For a Home Loan (Part 2)...

July 16, 2014
Yew Kong Lye

Now that you have a general idea about what happens when you make a loan application and what you can do within your control to minimise the stress levels, it’s time to understand the stages and life of a home loan application.

 

 

This will give you an insight as to what happens when you application is lodged with a bank. Here we assume a property has been purchased with a 30 day settlement.  This will help you to understand the processes involved and when the banks seem to take forever to settle on your home loan application

 

 


NO

STAGES

DAY

1.

Acknowledgement of receipt of application

1

2.

Acknowledgement of receipt of supporting documents

1

3.

Valuation ordered by broker

1

4.

Valuation ordered by bank

2

5.

Application assembled by document preparation team with boxes to tick

2

6.

If there are outstanding documents, request is emailed to broker

2

7.

Broker make request to clients

2 to ?

8.

If all documents are in order, application is forwarded to an loan assessor

2

9.

Valuer picks up valuation request and contacts estate agent for access

2

10.

Assuming access is available immediately, valuer does valuation and prepares report

3

11.

Valuer sends report to broker and bank

4

12.

Application sits in a queue and finally assessed

3 to 5

13.

Valuation report is attached to file

5

14.

Assuming no complication, assessor approves loan if valuation is complete

6

15.

Broker is notified about the unconditional approval

7

16.

Bank issues instruction to their solicitor to prepare loan documents.

8

17.

Bank’s solicitor contacts client’s solicitor to requested for information

9 & 10

18.

Bank solicitor prepares loan documents and dispatches

11

19.

Client receives loan documents via express post

12

20.

Applicant signs and returns document

13

21.

Bank’s solicitor receives document and do their checks.

14

22.

File certified and passed to their settlements department to tick their boxes

15 to 17

23.

Settlement department is ready to accept booking for settlement

18 to 20

24.

Your solicitor informs you of settlement and you collect keys from the estate agent.

21 to 22

  

 

 If you haven’t noticed from the table above, they are all in working days and exclude week ends and that should bring us very close to a 30 day settlement, that is, if everything happens with military precision. A few things that can trip us up in the above are:

 

  • The valuer can’t gain access to the property because the estate agent has lost the keys and the owner decides to celebrate in Hawaii for a 2 weeks because they got an incredible price at the auction which can fund the holiday and then more.
  • The applicant has buyer’s remorse and has gone into hiding and doesn’t realise that the bank has requested for more documents.
  • The assessor has had a bout of diarrhoea because he was partying too hard over the week end and has not shown up for work for the last 4 days.
  • The bank is under the pump and can’t re-assign your file from the diarrhoea ridden assessor because there’s no spare capacity.
  • Do you get my drift or do you want me to carry on as to why things might not go according to plan?

 

 

Though there’s a process with every bank as to how a home loan application is managed, there’s no guarantee that everything will fall into place nicely. Sometimes they do and sometime they don’t because multi parties and human beings are involved and mistakes can occur. It needs to be appreciated that even when everything goes to plan, 30 days is still a very tight dateline and that’s the reason why banks need a minimum of 30 days before they are ready to settle.

 

 

Hopefully, this has given you an insight to what is involved in a home loan application and solve the mystery as to why it takes the banks an eternity to approve the application. Now that you understand what happens, you should not call your broker hour on the hour for a progress report. The more time he spends soothing your anxiety, the less time he has to focus on getting you a result. “Happiness is a choice. You can choose to be happy. There's going to be stress in life, but it's your choice whether you let it affect you or not" - Valerie Bertinelli. For a stress free loan application experience call 0413 871 888.

 

 

 

Posted in: Home loans

Contact us today.


Additional Comments? * :