Home Loan Approval Time
Learn about how long your home loan's approval time may be in Savvy's comprehensive guide.
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There are a number of steps involved and ways that you can help speed the home loan approval process as a borrower.
The sooner your home loan is approved, the sooner you will be packing your bags to head to your brand new home.
How long does getting an approval on your home loan take?
Home loan approval times can vary from lender to lender and loan to loan. Generally, home loans will take between four and six weeks to be fully approved and settled.
A strong borrower who earns a good income, has an excellent credit score, a strong employment history and any other good borrowing characteristics will likely see a relatively short home loan approval time. Depending on the lender, you could see approval come within a fortnight.
Higher risk borrowers will likely see a further drawn-out home loan process.
Your home loan approval time will also be dependent on the home itself. You will see a quicker process if your property complies with the following:
- It meets the lender’s specific lending criteria.
- It is comparable with properties within the same or similar areas.
- Its value is equal to the amount being loaned.
The method of property valuation that is selected by the lender will also affect the time it takes for the process to be completed.
How do I compare and apply for a home loan approval?
Comparing different home loan products to find the best one for you should be a key step in the process for any borrower.
To do this, you can search the lender market yourself to try and find the best deal and you could even speak to a mortgage broker. They will usually possess an in depth knowledge of the field and hold a solid relationship with lenders.
But to see various home loan products and their specifications, you could also reviews Savvy's rate table. This will provide a very useful insight into what is on offer in the industry and will help you to make an informed decision.
Once you and any co-applicants have absorbed all of the information required, pick the lender that is right for you and start working through their home loan process.
Step-by-step guide to the home loan approval process
Pre-approval
The first step in the home loan process is securing a pre-approval or conditional approval. This is where a lender assesses your ability to borrow and repay on a home loan.
To begin the pre-approval process, you will need to submit a mortgage application form. This will be accompanied by other documents including:
- Multiple forms of identification.
- Recent payslips.
- If you are self employed, your most recent group certificate or notice of assessment.
- Proof of savings (and ability to pay a deposit).
- A statement of any current debts you have undertaken.
Pre-approval can take anywhere between three or seven business days.
Find your home
Definitely the most important step in the home loan approval process is finding your home. It is so crucial to find the right place as you could be living here for years to come.
Keeping this in mind, search the property market closely, do your best to ensure you end up where you want to be and for the price you want to pay.
Property valuation
The property valuation is undertaken by the lender so they are able to decide whether:
- It's up to the standard of their specific lending criteria.
- The value of the property is equal to the amount being loaned.
There are varying levels of valuation and some take longer than others. Depending on your specific situation and your property, you could receive this valuation the next day, where as some may take as long as seven business days.
Formal approval
Once your chosen property has been valued and met the lender’s criteria, you will be subject to a formal approval from your lender.
As you have already been pre-approved this step in the process should be rather uniform.
Usually, the formal approval step will take a handful of business days to process.
Contract of sale
After being formally approved by your lender, you will be sent a home loan contract and contract of sale. It is imperative that you thoroughly check and fully understand these documents.
It may be a good idea to enlist legal assistance for this step as they are familiar with the language involved in contracts and you may find it confusing.
Once these documents have been signed, you will negotiate a date of settlement with the vendor. Usually this will be set as four weeks after the signing of the contract of sale and home loan contract documents.
Top tips to shorten your home loan approval time
Be prepared
Before starting your home loan application, you should come prepared and know everything about yourself as a borrower.
Whether that means knowing your credit score or anything else to do with your borrowing status, knowing all your details will prevent any surprises and will mean you can move through the process quicker.
Carefully read each document you are presented with
Carefully reading every document minimises the risk of misunderstanding and mistakes from all parties involved. It will also allow you to gain a better and clearer understanding of the process at hand, what is happening at any given time and what to expect in the near future.
Remain timely
Remaining timely with all documents and responsibilities will take the pressure off of you and all other parties involved. It will also considerably speed up the process.
As soon as you get given a new document or need to call a lender about something, make sure you do so as soon as possible.
Disclose all information in full detail
Whether you’re in a conversation with your lender or any other relevant party, it is important to disclose all information with 100% detail.
This ensures that each party is on the same wave length and will allow the whole process to run transparently and smoothly.
Start your application at the right time
Usual business cycles for lenders run from month to month, so beginning an application in the middle or towards the end of a month could mean you start down the pecking order.
Starting your home loan application at the beginning of the month will not only improve your home loan approval time but will mean you have a good chance at remaining at the top of your lender’s pecking order until your application is complete.
