Steps to getting a home loan

When it comes to getting a home loan, the process can seem daunting – especially if this is your first application.

However, by being aware of the home loan application process – and the documents and information you may be asked to provide along the way – you can ensure everything goes as smoothly as possible.

Do your research

The first thing you’ll want to do is research the different types of home loans available as understanding the different options will help ensure you are making an informed decision.

Understand the loan conditions, penalties or exit fees?

You’ll also want to set yourself a budget, or perhaps talk to your home loans specialist about this, so you can determine the amount of money you need to borrow. Getting pre-approved for this amount could be a wise idea if you are still shopping around for the perfect property. Pre-approvals tend to last for up to three months and can help you move more quickly once you have found the perfect property.

If you are finding some of the terminology confusing, our Home Loan Glossary will help you understand the jargon.

Home loan documentation

During this application process, you’ll be asked for several pieces of documentation. This includes showing that you have enough savings to cover the deposit on your property and other fees that may be applicable.

If you are self-employed, you may be asked to show tax returns and other financial information from the past two years, while anyone who is employed will need to show evidence of their payslips.

Group certificates and 100 points of ID may also be requested.

Getting Approval

Lenders take into account four main considerations or criteria when assessing your home loan application. Firstly your capacity to repay the loan based on your income and expenses. Secondly, if you are considered a good financial risk, so they will check your credit rating to see that you have a history of repaying your debts. The third consideration is collateral, which ensures the property you are buying is adequate security for the money you wish to borrow to pay for it. Finally, they look at your capital, which are any assets you currently own.

Getting your application approved is the next step to owning your own home. Common practice is to obtain a ‘pre-approval certificate’ prior to buying a property. This will help your property search and keep your budget in check. This certificate confirms that a financial institution will lend you ‘x’ amount of money when you find a property to buy. Be careful though, one of the standard conditions is ‘subject to valuation’. If you pay too much for a property, your lender will see this as a risk and may not provide the cash. Not a good position to be in when you’ve already exchanged contracts!

With stricter lending criteria in the wake of the Global Financial Crisis, it may also be necessary to show a genuine history of your ability to save money. In some instances, particularly for first home buyers, a guarantor may also be required or a larger deposit (at least 20 percent of the purchase price).

Buying a property

Depending on whether you are planning to buy at auction or make an offer on a property, you’ll find there are some slight differences in the transaction process.

If you are buying at auction, you will usually be required to pay a ten per cent deposit at the moment the hammer falls – and there is no cooling off period. Your deposit is then held in trust by the agent or your solicitor and any interest earned is split between you and the vendor during the settlement process.

Buying from an offer usually involves a non-refundable payment of 0.25 per cent as a holding deposit if it is accepted.

From this point, you will usually be entitled to a five-day cooling off period, at which time you should organise your inspections and valuations, as well as discuss your finances with your lender.

During this period, it is essential to be aware that the property will not be held exclusively for you until a deposit of between five and ten per cent has been paid and contracts are signed.

Processing your home loan

After you have found the home you love and bought it you are up to the final state in the home loan journey, the processing of the home loan. To help ensure this runs as smoothly as possible it is important that your lender remains informed throughout the buying process as they will be able to process your home loan more quickly if they are aware of all the details.

This information includes the contact details of your solicitor or conveyancer, real estate agent and vendor, as well as a copy of the contract of sale. At this point, first-time buyers should complete their forms for the First Home Owners Grant – these can be supplied by your home loan provider or through your solicitor or conveyancer.

Once a valuation has been carried out and all the other documents have been received and processed, your home loan provider will grant formal approval on your home loan and the documents will be sent to you.

At this time, you will need to sign these documents and return them. Your solicitor or conveyancer will then liaise with your home loan provider until the loan settles – this usually occurs between 30 and 42 days after the contract has been signed, depending on its terms.

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10 rules for share house harmony

Regardless of whether you know your flatmates or not, when you put a group of people under the same roof you’re undoubtedly going to find things start to annoy you. Creating a happy share house doesn’t just happen it takes good communication, trust and tolerance. Here are some proven tips on how to achieve it.

Before you move in

Before you move in with someone, it’s a good idea to sit down and have an honest talk about your routines and lifestyles. If the potential flat mate is a morning person but you’re more a night owl, then perhaps it isn’t going to work. Or you may find that your potential flat mate loves to throw spontaneous parties and have loads of friends around all the time, but you prefer your home to be a sanctuary for quiet time, then again perhaps this isn’t going to be the ideal place for you.

Treat this process as an interview and try and find someone who has something in common with you. Of course if you’re moving in with friends you already know a lot about them but talking about their routines is still important as everyone has their quirks.

Signing the lease

Make sure all tenants sign the lease. If everyone’s signature is on the lease it means you have equal rights to the property and therefore equal liability. You’ll find your flat mates will be more aware of treating the property with respect, the rent will be paid on time and the property will be looked after if they are jointly liable.

Paying the rent

Figuring out how to split the rent can be challenging, but when living with roommates it is an important process to go through before your sign the lease. Here are 2 solutions to make this process as fair as possible and to help reduce any arguments. Make sure you work this out before you move in.

Paying the bills

One of the main points of conflict when sharing a house with roommates is rationing the utility bills and internet bills, because really, no one wants a slice. It is recommended to assign the responsibility to one of the co-tenants as soon as you move in. This doesn’t mean they pay the entire bill, but rather are responsible for paying the bill on time.

Cleaning and Chores

According to a realestate.com.au survey, flat mates get most annoyed if the people they are sharing with don’t clean up

Food and cooking

Discuss how you flat mates want to manage the food and cooking. Do you want to pool your funds and buy food that everyone shares, or do you want to buy your own food and have dedicated shelves in the fridge and pantry cupboard to keep your food. If this is the case (which is the normal scenario), if you eat your flat mates last yoghurt make sure you tell them and replace it.

On-going communication and respect

Communication is key especially when you are living together – it is important to discuss any issues or perceived issues straight away. Any unresolved or unstated problems can simmer and eventually become volatile.

Visitors, parties and communal areas

A lot of people love a party and having guests to stay over, but nobody likes to feel constantly outnumbered in their own home. Make sure you set some ground rules such as a maximum number of nights guests can stay over, or the guest sleeps in their hosts bedroom. It is also a good idea to discuss and agree whether you want your place to become a regular party place or whether you want to limit this to once a quarter or even once a year.

Pets

Before bringing a furry or slippery pet into the house, make sure you have discussed this with your flat mates. Some people have allergies to certain animals or simply just don’t like them, so give them the option before bringing your little friend into the home.

Create some house traditions

The best share houses have a sense of community and belonging, in other words they have fun together. This could be as easy as setting a regular night each week aside as a ‘family meal night’ when you rotate the cooking and grocery shopping. Everyone should put in to the kitty and make an effort to be home on that night. Other suggestions include, movie and popcorn night at home, local pub trivia night, cocktail tasting night, Sunday brunch, themed dinners, or perhaps roll your sleeves up and create a veggie garden in some pots or in the garden if you have one.