The home loan application process
Here's a handy graphic to help you understand the process a home loan application goes through.
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Ready to buy your first home? That's super exciting...and a little daunting.
Buying a house is a big deal, and there's a lot to consider.Here's four things you'll need before you can get your hands on the keys to your own place.
Most banks require a deposit of at least 5% of the purchase price of the house – often more. Getting together a deposit shows the bank you have the ability to be great with your money, which is important when you have to make regular repayments. The size of your deposit is a good indicator that you’re able to effectively handle your money. The amount you save for a deposit will influence how much you can borrow, and will have an impact on your loan to value ratio (LVR). Your LVR can then have an impact on the type of rate you’re eligible for and whether you will need to pay lenders mortgage insurance. And as a first home buyer, don’t forget to look into whether you’re eligible for the Government’s First Home Owners Grant. It could go a long way to getting you into your home sooner.
Before you apply for your home loan, you’ll need to show you have the ability to put money aside each month over an extended period. You can do this by setting yourself up with a regular savings habit. A regular savings habit will also help you understand your spending limits while paying off a house and will help you feel more positive about your future with a mortgage. Banks will examine how much you can realistically afford to take on. A home loan is a big commitment, so we want to be sure you’re going to be able to pay it back. A regular savings habit will win you brownie points.
Heard the saying about living a champagne life on a beer budget? Buying a house is a bit the same. There’s little point checking out multi-million dollar mansions if the banks will only lend you enough to buy something more modest.
To find out how much you could borrow talk to one of our lenders and give our borrowing power calculator a go. Remember, we offer a pre-approval service to help you shop around with more confidence. To organise a home loan pre-approval call 1300 681 183 or drop into your nearest branch.
It’s also important that you are comfortable paying back the loan amount. To help you understand more about the cost of paying back a mortgage give our home loan repayment calculator a go. It helps you estimate the cost of your mortgage, including stamp duty, rates, insurance, and maintenance. Use the calculator to see the effect different loan amounts will have on your repayments.
Life throws curve balls at all of us. Just when things are going well, the unexpected can happen – your hot water system goes on the blink, or your car breaks down and needs major repairs. A small stash of additional savings can act as a buffer when unexpected costs crop up. Being prepared will help you feel more positive that you’re keeping on track with your home-ownership goals and still enjoy life now. You don’t want to max yourself out by putting all your savings into a deposit and making repayments that leave nothing over at the end of each pay cheque.
Find out more about our application process, or download our handy Applying for a Home Loan help guide to make sure you’ve got what you need.
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