Rushing towards settlement day? Here's how to get your application organised and your mortgage approved on time.
A home loan application can take up to two weeks before a borrower is unconditionally approved for finance, but if you go into the process unprepared this timeline can blow out significantly.
There are steps you can take to ensure your mortgage application proceeds smoothly, and to get your finance unconditionally approved in the shortest time possible.
What's on this page?
Speed up your application
You can ensure your application proceeds quickly by doing the following:
1. Get your documentation ready
Lenders will need certain documents to process your application. You'll need to provide proof of identity, proof of employment and information on your income, assets, expenses and liabilities. Having all this information handy when you apply will save you time going back and forth.
2. Provide proper documentation
Providing the wrong documents is just as bad as not having documents to provide to your lender. Your lender will need certified copies of your documents, and will also look for certain things on your payslip. If your payslips don't meet your lender's requirements, your application could grind to a halt.
3. Know your credit history
You should be well acquainted with the entries on your credit report before you even sit down with a home loan consultant or broker. Bad marks on your credit file could see your application slowed down or even rejected. Check your credit before you apply to save yourself any nasty surprises.
Home loan application timeline
Just how long does home loan approval take? From application to settlement, you're generally looking at 4 - 8 weeks. But you can have your loan unconditionally approved in around 10 days from your initial application.
How long does pre-approval take? (1 - 2 business days)
Pre-approval puts you on the front foot of the home loan process. While pre-approval isn't a formal agreement, it will give you a good idea of how much you're likely to be able to borrow. This will give you an edge in your property hunt.
Submitting a loan application
For your loan application to progress past pre-approval, you will need to provide documentation on your assets, income, expenses and liabilities. You will need to bring these documents with you to your consultation with a mortgage broker or lending specialist. The application cannot progress to the assessment stage if you don’t have this information on hand.
Your mortgage broker will provide a list of all the things you need to supply before you come to the consultation and your lending specialist should provide you with the same information.
You should be able to provide the following information:
- Copies of your recent payslips for the last 3 - 6 months and previous group certificates. If the borrower is self employed they will need to provide Business Activity Statements (BAS) for the past two years.
- Any other information about any other areas of income - investors may have sources of rental income.
- Information about assets. Details about things like shares, investments, term deposits, savings accounts, vehicles or any other major assets.
- Details of all your expenses, including HECS Debt, school fees, phone bills, rent or any other expense.
For people who can’t provide all of the information above and are looking to take out a low documentation loan, the process will take longer.
How long does conditional approval take? (3 - 5 business days)
Here the lender looks at your ability to borrow funds and service the debt. Borrowers will be either conditionally approved, pending a property valuation, or will be given full approval. This will take between 3 - 5 business days, depending on the volume of applications being handled by that particular lender at that time.
How long does a valuation take? (3 - 5 business days)
After conditional approval has been granted, the lender will order a valuation on the property to assess the value of the loan security.
Armstrong says this is where it can take some time. ‘It’s really the valuation that can hold up the process because the valuer has to go out and value the property and then send in the report - that can be a 48 hour turnaround - so you have to factor that in,’ she says.
Lenders mortgage insurance (1 - 2 business days)
Depending on the size of the deposit, borrowers may be required to pay LMI. If the loan to value ratio is over 80%, then the application will be passed to a mortgage insurer, either handled in house or externally and is subject to further credit checks. This will take between one or two business days after the property valuation has been received.
How long does unconditional approval take? (5 - 10 business days)
The final step, this involves meeting with your loan specialist or broker to pick up the contract. From application to unconditional approval can take
Lender processing times
Processing times vary from one lender to another. Some can turn an application around within days, while others could take weeks. Commonwealth Bank states that straightforward home loan applications take from 4-7 business days, while online lender Tic:Toc says it can give full approval in 22 minutes. It's worth checking with your lender when you apply so you can manage your expectations.
Fast mortgage options
Some lenders offer fast application processes that promise to speed up the mortgage process. One of the more ambitious lenders in Australia offering fast applications is Tic:Toc, an online-only lender backed by Bendigo Bank. The company uses a digital algorithm to process your application in real time. Their pitch is the "22-minute home loan." There's no catch, exactly, but the fast process only works if you have all the required documents ready and you will need to connect to your online banking platform.
You can compare Tic:Toc's loans and learn more about their process here.
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