Home loan approval process: How long does it take?
- It can take anywhere from a few hours to a few weeks to get home loan approval
- Getting pre-approval is one way to make the process smoother
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Thinking about buying your first home and want to know what the process involves and how long it might take to get approval from a lender?
Getting your head around the process helps you set expectations when buying a property and applying for a home loan. It can also help you avoid any hold-ups that could prevent you from getting into your dream home on time. Let's break it down.
What are the main steps in the home loan approval process?
The home loan approval process can generally be broken down into three main stages. Although exactly how it works will depend on the lender you choose and your circumstances. It will also depend on whether you’re applying for full loan approval or pre-approval.
Here’s an overview of the steps that are typically involved.
- Pre-application: This covers everything that goes into prepping your application. This can include researching lenders and loan types, talking to a broker or using online calculators and financial tools to help work out your eligibility and how much you can borrow. You'll also need to gather documents like pay slips and bank statements to submit with your application.
- Application for pre-approval: This involves completing a loan application form and submitting evidence to support it. Once you’ve submitted your application, it will be assessed to determine if you’re eligible and for how much money. The lender will typically also do a credit check at this stage.
- Post-approval: When you’re pre-approved and you’ve had an offer accepted on a home, the lender will reassess your application based on the property you are buying. If you get final (unconditional approval) the lender will send you documents to sign, then arrange the transfer of funds to the seller. Job done.
If you don't get pre-approval, stages two and three will happen in a more condensed time frame after you have found the property you want to buy.
How long does the home loan approval process take?
This will depend on how efficiently you and your lender can move from each stage to the next. While it's possible for some lenders to pre-approve a home loan within a few hours, the full process can take several days or even weeks if there are delays or complications.
If you're on a tight schedule, it could be worth asking the lender what its usual processing times are. Some online lenders market themselves based on their efficiency and slick processes. Other providers put less emphasis on speed. So it can be worth shopping around.
Pre-approval can help streamline the process
Home loan pre-approval can be a helpful step for borrowers. This is because you get a lot of the work done early in the process, which can save you time later on.
It also means you can act more decisively when making an offer on a property you love because you have a firm idea how much you have to spend.
Timings for each step in the process
- Research lenders and loan options This can take anything from a few minutes to several days depending on how thorough you want to be (remember, this is an important step to get right).
- Completing the home loan application Some online lenders promise applications in as little as 15 minutes but it will take longer with other lenders and if your situation is complex.
- Wait for lender pre-approval: This depends on the lender's processes and whether it needs to ask for further information from you to clarify any details. Best case scenario, it may be possible to get conditional approval within hours of submitting your application but it can take several business days or longer if there are complications.
- Apply for unconditional approval You do this after your offer is accepted on a property. This step can be completed relatively quickly, particularly if you already have pre-approval.
- Wait for unconditional approval to be granted This can take a few days or it can run into a couple of weeks, you guessed it, depending on the situation. In many cases the lender will arrange for a valuation of the property you’re buying, which takes time to be completed.
- Signature and settlement The final steps of signing the loan agreement and waiting for the lender to formally settle the home loan can take another few business days.
Can you get your home loan application approved faster?
You’re at the mercy of your lender’s processing times for much of your home loan application. But there are some steps you can take that may help you speed up the process.
In the pre-application stage
- Collect the supporting documents you'll need for your application in advance.
- Do a health check of your own finances to help ensure you’re in a strong position to be approved. For example, review your bank statements and check your credit score.
- Choose a lender with a good track record for efficiency (while making sure that the loan stacks up based on interest rate, fees and features too).
- Apply for pre-approval before you start inspecting properties as the application process may be more straightforward that way.
When making your application
- Provide all the information you’re asked for by the lender. If you leave stuff out, they'll probably follow up and ask again.
- If possible, explain any unusual earning or spending patterns that may show up on the documents you provide in support of your application. This could save the lender following up to check these with you.
- Be sure to let your lender know what the finance and settlement dates are in your contract of sale for buying the property so it can work to those timings.
What's the longest it will take to approve my home loan?
Usually the process takes a matter of weeks from start to finish but in extreme cases it may take months to be completed.
If your situation is complicated, either because of the amount of money you're borrowing, the type of property you're looking to purchase, or your financial situation is not typical, then you'll need to allow more time for lender approval. You could also speak to a mortgage broker to assist with completing your application.
If you’re concerned about getting approval in time, you can ask your lender what their processing times are and inform them if you have a finance deadline in your property contract that you need to meet. You can also ensure your home loan application is as complete as possible by including all documentation.
What if my home loan is not approved in time?
If your lender cannot approve your home loan in the timeframe you need, it could mean missing out on closing the deal on your ideal property. If you think your home loan may not be approved before the finance deadline on your contract, speak to your conveyancer or solicitor for advice.
There are a few reasons your home loan approval could be delayed, but one of the easiest ways to avoid this is by getting pre-approval, and understanding the requirements of your lender to ensure there are no issues when formally approving your home loan.
Shopping around for the right loan can save you thousands of dollars in interest and fees.
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What's the next step on your property journey? Our home loan guides will help you navigate the road ahead, whether you're buying, building or looking to save on an existing loan.
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Written by
Loans Expert
Shaun McGowan
Reviewed by
Editor
Sean Callery
