If you are considering buying a home, renovating an existing home or investing in real estate property, then knowing the process for a home loan would become very crucial. At least the process between application and approval of a home loan seems incredibly complex, so you need the proper guidance and preparation to make a home loan claim smooth. This blog provides a step-by-step guide on claiming new home loans in Australia. It provides insight into the selection of the best loans, whether you are for renovation property loans or after-investment property loans.
Assess Your Financial Health and Loan Eligibility
When submitting a home loan application, the first consideration is determining your financial readiness and suitability level. Lenders seek stability in income, a good credit history and an acceptable debt-to-income ratio. Here’s what to consider:
- Check Your Credit Score: A strong credit score will increase your chances of getting that loan approved and access to better interest rates.
- Compute the Monthly Income Along with Expenditure and Unpaid Dues: This will serve as a guideline for how much you may comfortably borrow.
- Determine the Loan Amount and Deposit: Most mortgage lenders in Australia require a deposit of 5-20% of the value. The higher the deposit, the better the condition of the loans.
Loan and its Types
Loans serve different purposes. For instance, a new home loan would have different requirements and terms than a renovation loan or investment property loan. Here are a few types of loans.
- Fixed Rate vs. Variable Rate Loans: Fixed loans can be more predictable as they have fixed rates set, and then, on the other hand, you will have variable loans. Their interest rates are in terms of the market, hence giving them a chance for flexible savings.
- Property Renovation Loans: These are for those looking to renovate or upgrade their property. The loans often take into account the future value of the renovated property.
- Investment Property Loans: These loans are for those purchasing a property for investment purposes. They often have tax benefits but are much more stringent in conditions.
Documentation
Once you have chosen your loan type, the next step is to collect all the documentation required for the application process. In general, lenders in Australia usually require the following:
- Income Proof: Recent payslips, tax returns or financial statements for self-employed applicants.
- Identification: Passport, driver’s licence or any other identification showing residency.
- Bank Statements: The last three to six months’ statements show income and expenses.
- Other Liabilities: Other current loan repayments or credit card debts.
Apply for Pre-approval
Loan pre-approval application is one of the stages of the home purchasing procedure. It helps to know what you can borrow; hence, you get the confidence to look at property within your range. Many lending institutions in Australia do give pre-approval for a period of between three and six months.
Pre-Approval Advantages:
- Budget with Confidence
- Speedy Property Purchasing
- Bargain from a Strong Position
Complete Home Loan Finalisation and Mortgage Application
Once the desired property is identified and pre-approval is already created, one takes the step to finalise the home loan application. This involves the following three critical steps:
- Valuation of the property: The lender establishes the property’s worth to ensure that the valuation is reasonable and on par with the loan amount.
- Review by the legal team: The legal teams on the lenders’ end will scrutinise all documents, such as the sales contract and title to the property.
- Loan Acceptance and Settlement: A loan will be taken to the settlement stage, where a lender transfers money to the seller to finalise the home-buying process.
At Real Lending Solutions, we guarantee that you receive the required support at every step as we guide you through navigating the loan procedures to buy your dream home.
