How to apply for a home loan

Rates and fees last updated on

Apply onlineFind out what’s involved when it comes to applying for a home loan.

Through the home loan application process a lender will need to assess a range of factors to determine exactly how much you can afford to repay. In order to do so there’s documentation you’ll need to provide in order during the application process in order to be approved.

Applying for a home loan can be time-consuming, so it’s important to understand the steps involved.

Each lender has its own application and lending criteria but despite this the basics of the home loan application process are similar no matter which lender you apply with. In the guide below, we explain what you can expect from the home loan application process.

Home loan comparison

Rates last updated August 22nd, 2017
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Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment
loans.com.au Essentials - Variable (Owner Occupier, P&I)
A basic home loan with a competitive rate and low fees.
3.64% 3.66% $0 $0 p.a. 80% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.49% 4.47% $0 $375 p.a. 85% Go to site More info
UBank UHomeLoan Variable Rate - Standard Variable Rate Value Offer (Owner Occupier P&I)
Combine a low variable interest rate and free redraw with no application or ongoing fees.
3.74% 3.74% $0 $0 p.a. 80% Go to site More info
Reduce Home Loans Rate Buster 100% Offset Variable Home Loan - Up to $750k (LVR <=80%)
Borrow up to 80% LVR with no ongoing fees and a 100% offset account.
3.54% 3.54% $440 $0 p.a. 80% Enquire now More info
loans.com.au Offset Variable - Up to 80% LVR (Owner Occupier P&I)
Take advantage of a 100% offset account along with no annual or application fees.
3.72% 3.74% $0 $0 p.a. 80% Go to site More info
IMB Budget Home Loan - Special LVR <=80% (Owner Occupier and Principal & Interest only)
A special limited time offer for owner occupiers. An IMB Transaction Account must be opened with this loan.
3.79% 3.84% $445 $0 p.a. 80% Go to site More info
Bank Australia Basic Home Loan - Variable (Owner Occupier)
Pay no ongoing fees on a competitive variable rate home loan.
3.86% 3.87% $0 $0 p.a. 80% Go to site More info
HSBC Home Value Loan - Resident Owner Occupier only
Enjoy a low variable rate with no ongoing fees and borrow up to 90% of the value of the property.
3.85% 3.86% $0 $0 p.a. 90% Go to site More info
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I) First Home Buyer Special
A special rate for first home buyers buying residential property and borrowing over $150K. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.69% 4.86% $0 $395 p.a. 90% Go to site More info
Tic:Toc Live in Loan Variable Rate
A competitive variable rate product with low fees offered by a 100% online lender.
3.68% 3.69% $0 $0 p.a. 80% Go to site More info

How do you apply for a home loan?

With a wide range of lenders and loan products to choose from, there’s also several ways that you can apply for a home loan. You can typically begin an application online either through an enquiry form where the lender will get in touch to discuss or through a full application process.

If you prefer to conduct your banking in person you can do so in branch with your chosen lender, if they have a branch near you, or most offer mobile lenders that will come to you. You can also begin the process over the phone. With these options, you’ll need to ensure you have all of the necessary documentation with you so you can complete the process.

Finally, you can apply for a loan through a mortgage broker. A mortgage broker can guide you through the application process, after helping you choose a product from the suite of lenders they work with.


How to apply for a home loan


The home loan application process

The process is composed of different stages which include application, verification, valuation, approval and settlement. Find out about each stage:

1. Application

Once you've compared loans available in the market, it's time to begin your application. The application can be submitted online, over the phone or in a branch.

During the application, you'll need to submit basic personal information, financial information about your income, assets and liabilities, and information about the property you want to purchase.

The documentation required at this stage is extensive and may take some time to organise. However, you should be able to put together everything you need within a couple of days.

Remember that a mortgage broker can walk you through the application process from start to finish.

2. Conditional approval

Conditional approval is usually granted within two or three business days and it basically means that after reviewing your financial situation and the amount you want to borrow, the bank is happy to lend you the money you want – provided that certain conditions are satisfied.

The most common condition is that loan approval will be subject to the lender having the property professionally valued to check whether you are paying a fair price. The lender will usually also conduct a credit check at this stage of the process to ensure that all applicants have a clean financial record.

It’s worth pointing out that home loan pre-approvals or indicative approvals, which can be obtained without providing your full financial information or supporting documentation, don’t necessarily mean you will automatically be accepted for a loan.

However, pre-approvals can be a handy tool to increase your bargaining power when you’re out house hunting.

Find out more about pre-approvals here.

3. Verification

During the verification stage, the lender will check whether the information you provided is complete and correct. They achieve this by checking your bank statements, employment details, payslips and other debt details.

The lender will also have to check your credit file. During this time, you may receive updates on the status of your application.

4. Valuation

Lenders will have different rules around property valuations, with some requiring you to use their own valuers, while others will be happy for you to organise an independent valuation. Some lenders offer this service for free, but if you are charged you can expect to pay a few hundred dollars.

5. Full approval

Full home loan approval is the lender’s way of acknowledging that your home loan application has been approved. Also known as unconditional approval, full approval is usually granted within four to seven working days.

Now is a good time to finalise your budget and work out how you are going to go about keeping up with your loan repayments.

6. Settlement

The final stage in the home loan application process begins when your bank or mortgage broker informs you that the lender is ready to settle the loan. You will need to arrange a time to review and complete the loan documents and then sign your mortgage. If you’re purchasing a property, your solicitor will most likely liaise directly with the lender to organise this part of the process.

Stamp duty and mortgage registration costs are charged to you at this stage, while your title deeds and mortgages will also be registered at your state government Land Titles Office. Your mortgage broker or lender will most likely offer you some tips and advice on how to manage your loan repayments.

Once the outstanding costs have been 'settled', you'll receive the keys to your home.

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Online application process

Technology has forever shifted all areas of banking and home loan applications are no different, with the growing popularity of online only lenders there is a new way to apply and access a home loan. With the increase in security online there is a growing number of lenders that are processing some or all of a home loan application online.

While online only lenders such as loans.com.au, UBank and Switzer Home Loans build a business model around being accessible only online they are not all the same. Most online lender will get you to fill out a form with all your details and then at the end offer pre-approval or not depending on your personal circumstances.

When applying with loans.com.au you can also download its onTrack app to keep track of your application on your smartphone whilst on the go. You will then have all documents and details of your loan sent to you through the app, see diagram below.

loans.com.au application process

Online lenders aren’t the only ones jumping on the online application bandwagon all four of the big four banks offer online applications to at least pre-approval. As well as the big four lenders such as Bankwest and St.George allow customers to apply online in some form.

You fill in a simple online form and some lenders will also ask you to upload the relevant documents that you are asked to produce with your application. Other lenders will take the information you have input online to contact you and discuss your home loan needs and move on from there.

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What information will you need to supply?

When applying for your home loan, you need to prove to the lender that you will be able to repay the loan. To do this, you will need to provide documents that support your employment, credit worthiness and your financial status.

Personal information

The lender will need to be satisfied that you are who you say you are when you apply for a loan. It will also want to check the credit history of anyone included in your loan application. With this in mind, you’ll need to provide:

  • Your full name. The name on your loan application should be your full legal name.
  • Your current residential address. The lender will need to know where to send any correspondence, plus they may also want to know how long you have been living at your current address.
  • Your contact details. The lender will need your phone number so they can get in touch with you.
  • Proof of ID. ID requirements vary depending on whether or not you’re an existing customer with the lender. While a current bank card may suffice for existing customers, new customers will need 100 points of photo ID such as a driver’s licence or passport. Birth certificates, pension cards and household or utility bills can also be used to prove your ID.

Financial information

Next, the lender will need to calculate your ability to repay the loan, so you’ll need to provide:

  • Income and employment. The amount of income you earn will have a huge impact on the amount you can borrow. You’ll need to provide multiple recent payslips that show your name, your employer’s name, and your annual salary or a year-to-date figure. Some lenders will require your most recent income tax return or a signed letter from your employer explaining your occupation, how long you have been employed with the company and your annual salary.
  • Proof of savings. You'll need to provide proof of the deposit you have saved for your home loan. A bank account statement showing six months (or more) of regular contributions to a savings account can provide proof of your deposit, but also demonstrate sustained financial discipline to the lender.
  • Asset details. Any assets you own will increase your borrowing power, so provide proof of assets such as other properties, shares, term deposits and motor vehicles you own. Any income you receive from other sources, for example rental income or share dividends, should also be disclosed.
  • Liability details. The lender will want to work out your debt-to-income ratio – the portion of your monthly income that goes towards paying off debts. You will need to provide evidence of any liabilities, for example existing loan statements and credit card debt statements.

Property information

Finally, the lender will need to know more information about the property you want to buy before they can approve your loan. You'll need to provide:

  • The contract of sale. The contract of sale contains important details including the address of the property, the seller’s details and how much you are paying for the property.
  • Copy of the Transfer of Land. The transfer of land details the transfer of the ownership of the property into your name, and the lender may need this document to confirm that the person selling the property is the rightful owner.
  • Proof of property insurance. Your lender may require proof that you have an adequate level of home insurance in place for your new property. This gives the lender the added security of knowing that you will be able to keep up with your loan repayments if your home is damaged by an unexpected event.
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Documentation requirements for other borrowers

  • Self-employed borrowers. If you’re self-employed and you can’t provide the usual proof of income, you’ll need to provide other documentation to prove your income. Tax returns and accompanying ATO assessment notices for the two previous financial years are commonly required. You may also need to supply a business tax return, profit and loss statement, and balance sheet.
  • Construction loan borrowers. You’ll need to supply additional documentation if you are applying for a loan to build your own home. The lender will most likely ask for a fixed price building contract and council-approved building plans or a building permit. Check the fine print of your loan to make sure there is no other information you need to offer.
  • First home buyers. If you’re buying your first home, you may also be eligible for financing under the First Home Owners Grant (FHOG) in your state or territory. If so, make sure to include any additional FHOG application forms with your home loan application.
  • Refinancing borrowers. If you’re refinancing an existing loan, your new lender will require you to provide copies of current loan statements for at least the previous six months.
  • Bad credit borrowers. If you have a negative listing on your credit file, you may want to go through a non-conforming or a specialist lender. You should speak to a mortgage broker to discuss your borrowing options and to find out how you can improve your financial position.
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Marc Terrano

A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at finder.com.au. Talk to him to find out more about home loans.

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