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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.
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.
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.
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.
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.
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.
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.
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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