Step By Step Guide To Getting A Home Loan

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There is an element of excitement when buying property, and whether you’re a first home buyer or a seasoned investor there are many things to consider when taking the step into the world of property ownership.  Where the purchase involves finance there are a few extra tasks before you secure that home loan and lock in a successful purchase.   

In today’s blog we’re going to explore the basic steps involved in getting a home loan along with some good tips from McAdam & Turnbull Realty Principal Lachlan Evans.

The home finance market is extremely crowded with a sea of lenders offering different rates, products and features as well as a string of conditions before you secure a loan.  It can be a confusing process, so you’ll also need to ensure the loan will meet your needs now and into the foreseeable future.

 Knowing your borrowing capacity is an important step before you head out to find the perfect home after considering your income, expenses, and personal circumstances.  Many of us know people who went house shopping, found a great home, and were left devastated when they didn’t qualify for the loan amount needed. 

 So, Step 1 is making an appointment with your bank, lender or Finance Broker to determine borrowing capacity and map out a viable plan towards home ownership.  You’ll generally need to take along evidence of your income, deposit, debts, and other expenses.  As part of this meeting they should also talk to you about price ranges and loan amounts you can afford to repay.  After all, borrowing capacity is one thing, but comfort level can be another story all together! 

Step 2 involves exploring the option of a Pre-Approval application if you’re ready to take the next step.  The bank or Broker will research and present loan options based on your preferences, product availability, interest rates and special offers. In the case of a broker, they may present options from multiple banks and lenders.   After submitting an application for pre-approval and assuming it is approved you will have a defined period, usually 30-90 days to find a property. 

Not every home buyer goes through the pre approval process.  Some buyers will find a property, negotiate the contract and then explore finance options.  There are pro’s and con’s with both options and Lachlan recommends you discuss these with your lawyer, financial advisor and broker (if applicable).  That said, it is a fact that a seller will always look more favourably on an offer from a buyer who has a pre-approval for their finance already in place.

Step 3 – Whether you have a pre-approval in place or simply go out and find a property to purchase, it’s time to sign a contract once the price and other conditions are settled.  The buyer should also liaise with a solicitor specialising in property transactions (conveyancing) regarding appropriate contract conditions.  In many cases the contract is prepared by the real estate agent although it can and sometimes is prepared by the conveyancing solicitor. 

 HOT TIP!!!  The purchase process (in terms of contracts) varies considerably between the States in Australia.  In Queensland, home buyers sign a contract at the beginning of the process.  This differs from other states where the contract is signed on the day of settlement.  McAdam & Turnbull recommend you get appropriate legal advice to ensure you get things right.

 In this blog we’ve restricted our discussion to Queensland purchases where the contract outlines the property details, the buyer/seller information, as well as price, finance deadline, settlement date and other relevant information.

The finance and settlement dates are important contract conditions, and they need to allow for sufficient time so the lender, lawyers and other parties can complete the necessary steps before the specified dates.  So, once the contract is signed it’s off to the bank or broker as you need to submit a formal loan application for approval.  If you have a Pre-Approval in place then it needs to be converted to a full approval so you still need to make contact with them.

 The loan approval will trigger the loan contracts being sent to you for signing.  Your bank or finance professional can clarify any matters relating to the loan product and features, and Lachlan strongly recommends that you seek professional legal advice from your solicitor regarding the loan contract.

 With the signing of the loan contract and its return to the lender, your solicitor and other parties will work towards the settlement when funds are exchanged and ownership transfers to you! 

 McAdam & Turnbull are focused on building strong relationships and delivering outcomes that meet the needs of all home buyers, and believe good engagement and reliable communication is at the heart of a successful property transaction. 

 The process of buying property can be complex and every persons situation is different.  This blog isn’t intended to cover every step and circumstance involved in buying property and getting a home loan.  Today we’ve scratched the surface and given a broad introduction. 

 The team at McAdam & Turnbull are focused on tailoring real estate options to meet your needs and keep the experience as stress free as possible.  That’s how we’ve delivered peace of mind and the right real estate solutions to the Toowoomba community since 1980.