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How should I apply for a home loan?

The online world lends itself to greater variety when it comes to applying for a home loan, so find out which application method is right for you.

Applying for a home loan The home loan industry has evolved dramatically and as a result, there are several ways that borrowers can navigate the application process.

Whether you apply with a mortgage broker, over the counter at a branch, or online (either through a broker or directly with the lender), learn more about each application process to see which one will suit you.

Applying with a mortgage broker

The primary benefit of applying for a home loan through a broker is that you can leverage their industry knowledge and networks to find a suitable product. Typically, a broker has access to home loans from a large database of providers including banks, lending societies, credit unions, and non-bank or specialist lenders (this can be useful if you're a borrower with bad credit or if you’re receiving Centrelink benefits).

When you visit a mortgage broker, they’ll request information about your personal and financial situation. The broker will use this information to determine your borrowing power and suitable finance options.

Next, a mortgage broker will help you sift through and compare different home loans and they can even negotiate for a better rate on your behalf. They should provide you with calculations that demonstrate your propensity to repay a loan which will give you an idea of what your monthly repayments may be.

A licensed mortgage broker can help you prepare all the required paperwork and they can lodge your application on your behalf which eliminates the hassle of the application process.

Although most brokers provide their services free of charge, you should be wary of mortgage brokers that may have a conflict of interest. As brokers receive commissions from lenders, they may favour products from lenders that offer them a higher commission.

However, under the National Consumer Credit Protection Act (NCCP), a mortgage broker has a duty of care to only recommend suitable products so given that they have a MFAA membership, you can be fairly confident that you won’t receive a biased product recommendation.

Learn more about how mortgage brokers operate here.

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Applying at a branch

A bank loan officer generally acts in a similar way to a mortgage broker, however they represent the lending institution and can match you with the best loan available from that institution. If you’re an existing customer of the lender, and you have a good credit history, you can negotiate for a competitive deal on your home loan.

If you prefer to speak with someone face-to-face, then you may benefit from applying with the bank in person as you’ll have a direct contact to help you through the application process. As there is no intermediary involved, such as a broker, the bank representative will be an expert with the lender’s application process, lending policies and products, which may speed up the process.

Additionally, if you’re not online savvy or you don’t feel comfortable providing sensitive or personal information online, then applying with a lender in person may be the best application method for you.

On the other hand, applying with the bank in person limits you to the home loans provided by that bank only, which may not be suitable for your situation. Also, this limits you to lenders that have branches which are easily accessible to you. Keep in mind that some lenders have a small branch footprint, while others may have no branch footprint if they operate solely online.

Discover more about the broker vs lender debate on this page.

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Applying online

Home loan application onlineWhen you apply for a home loan online, you can normally do this through an online broker or through the bank directly.

If you’re unable to physically visit a broker, then using an online broker can be an effective way to compare home loans and begin the application. The process will be similar to if you visited a broker in person, however all communication will be conducted via phone, email or digital channels. For instance, many lenders now have an online chat feature to facilitate the online application process.

The advantage of the online realm is that it can be accessed at any time and from anywhere. You may be asked to upload any relevant documents in regards to your income, assets, expenses, and anything else related to your loan and send them to your broker rather than visit the broker yourself. This can save you significant time in travelling back and forth to see a broker.

As some lenders operate exclusively online, these banks may offer products that brokers don't have access to.

Completing the application process online with the lender is a common way to apply for a mortgage product. Generally, you’ll need to submit an initial enquiry form on the lender’s website expressing your interest in the home loan. After this, a home loan expert will be in touch with you to discuss your eligibility and suitability for the product.

If you satisfy the eligibility requirements, the home loan expert will explain how you can begin the application process. This normally involves completing an online application process where you’ll be required to disclose information including details about your income, assets and liabilities, as well as information regarding your residency and/or citizenship, loan purpose and details about the property.

You’ll then be required to supply supporting documentation which your application form. Once the documents have been verified, the lender will notify you of your application outcome.

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Belinda Punshon

Belinda is a journalist here at finder.com.au. Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

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