Apply for a home loan

The average Australian probably hears the  phrase ‘home loan application process’   and shivers because, well, it’s not one  that fills most people with excitement! Or at least that’s been the case  historically – not any more though thanks to Compare the Market’s  new home loan application service. Not only does it make comparing  your options an absolute breeze,   but once you’ve settled on a  home loan you’re happy with,   you can apply for it then and there! In  the exact same place that you found it.

Before you get started,   you’ll want the following at hand; Your MyGov ATO login in (for evidence   or your income) or your last three payslips, Your driver’s licence and passport (or ImmiCard) Once you’ve got those together, step one  is completing the online application. This will require you to provide  information regarding what you are   looking for in a loan and what you want a  loan for, along with your personal details   and financial circumstances. Once you’ve verified your identity,  Compare the Market will run a   provisional suitability check for you  against the lenders in their database,   and submit an application on your behalf if  there’s one you think might be right for you.

Once you’ve done that, it’s time to get stuck in.  Note that we’ll be going through the process for   taking out an owner-occupier home loan using  the new tool – if you’re after an investment   home loan or want to refinance an existing  loan, the process shown may vary slightly. First, let’s go through your goals  and objectives. Like I said earlier,   it’s important that you know  what you want before you begin   the application – otherwise the process  could end up taking longer than it has to.

You’ll then reach a screen where you are asked to nominate how much you are thinking   of paying for the property in question.  If you’d like a bit of a steer here,   you can click the ‘get market  price estimate’ button. This will give you an estimate of what  the property could be worth at market,   along with a confidence rating for that estimate  and a potential price range for the property. Once you’ve answered that question, you’ll be  shown a summary of your answers so far.

Give it   all a once-over to make sure it’s all correct,  and then it’ll be time to talk about your loan. Alright, time to provide some information about  the home loan you’ve got in mind. You might   not have thought about some of these questions  before, and that’s ok – have a think about them,   maybe chat to one of the on-call Home Loan  Specialists if you have any questions! First will be your preferred loan term  – if you’re taking out a new home loan   the standard answer will typically be 30 years,   but if you’re refinancing you  might want to think about this one.

Next, do you want to start out  making principal and interest   repayments or do you want an  initial interest-only period? Ok this is a big one – do you want a  variable rate or a fixed rate to start out? Next, do you want to make your  home loan repayments on a weekly,   fortnightly, or monthly basis? The initial instinct may be to simply line  this one up with however often you get paid,   but keep in mind that you’ll usually save on   interest the more frequently you  make your home loan repayments.

It’s time to pick your home loan features! Offset accounts are a great example – before   you click yes or no, consider that having  an offset account attached to your home   loan will typically drive up your regular  home loan costs; be they annual or monthly. Redraw facilities on the other hand, typically  don’t cost anything to have on your home loan. Onto your deposit – how much have  you got, and where is it coming from?

You’ll need to have genuinely saved  at least 5% of the loan value,   but the rest could come  from a few different places: Also worth noting even cash  gifts and inheritances can actually   count as ‘genuine savings’ if you can  hang on to them and continue to save   them for three months or longer  after you first receive them. Once you’ve told them what  your deposit looks like,   you’ll be shown a summary of your loan scenario  based on the answers you’ve given. You’ll also   be given an estimated required loan amount,  and what your loan-to-value ratio would be. It’s worth noting that those estimations  will factor in a variety of upfront buying   costs including conveyancing costs, stamp duty,   title transfer and mortgage registration  fees, and inspection fees – among others.

If your deposit is less than 20% of the total  loan amount plus these upfront expenses,   you’ll be warned that you’ll likely  have to pay Lenders Mortgage Insurance. If everything detailed on-screen in  the loan scenario looks good to you,   it’s onto the next section – applicant details. Alrighty! It’s time to tell them about yourself  in more detail.

If there are co-applicants,   each one will have to answer these questions.  Thankfully they are all fairly simple,   so it shouldn’t be much of a hassle either way. Eventually you’ll make your way  to a screen asking you about your   profession. If you’re an accountant,  or a legal or medical professional,   some lenders may offer you an LMI waiver and/or  a reduced rate.

If you are none of those however,   you can just click ‘other’ and then  specify what it is you do when prompted. You will soon reach a screen with questions  regarding your credit history and financial   situation, as well as any future plans you might  have that could affect your financial situation. If the answer to any of these questions is ‘yes’,   you’ll be asked to provide details  explaining the nuances of the situation. Following that, you’ll be shown  another summary screen displaying   your answers to the latest  batch of questions.

Again,   check these carefully! If you’re content  that everything is correct, we can move on. You are exempt from this next bit if  you don’t own an investment property,   but if you do, you’ll have to provide  information on the property, its value,   the rent you earn from it, and the mortgage  against the property if there is one. You’ll then be shown another summary  screen displaying all the details you’ve   provided regarding your investment  property.

Check it all for accuracy,   and once you’re done you can move on.

– Next up are your assets, liabilities and income.  You’ll be shown a screen for each of these,   and asked to provide details – for example,  your assets will include things like vehicles   or investments. Your liabilities will include  any credit cards, any other loans or a HECS debt,   and for your income you’ll want to call out any  regular investment returns, government benefits,   or child support payments in addition to your  PAYG income. What matters is the accuracy   of the numbers you provide, so be sure to  double-check them – don’t just ballpark it!

Next, you’ll be detailing your expenses. And  here’s where you can take advantage of the Compare   the Market’s clever link to your financial  institution. Connect up to your credit cards   and bank accounts, and it’s job done! Or if you’d  prefer you can manually fill out your expenses.

If you elect to fill out your expenses manually,   you’ll be given a list of categories  – food and groceries, rent, transport,   things like that – and asked to give a dollar  value per month for each one. This part is   important so best to be specific and accurate  here to avoid tricky questions down the track. Onto Verification of Identity,  or VOI for short. Your nominated   mobile number will already be listed  on-screen, and to complete this step,   you’ll just need to select your mobile number  and click ‘send link’.

You’ll then receive a   text containing a secure link taking you  to the identity verification process. On your phone you’ll be required to provide your  identity documents with the most common being your   passport and Australian Drivers Licence. ImmiCard  or proof of age cards are also acceptable. You’ll be required to take photos  of your identity documents in line   with the on-screen directions shown on your phone,   and then confirm that the system has  read the alphanumeric details correctly.

Once that’s done, you’ll be asked  to take a selfie – make sure your   head fits within the outline on  screen, and don’t forget to smile! Once complete you’ll be directed back for the next step of the process. You are in the home stretch! All that’s left for  you to do is upload your supporting documents as   listed.

This could include your most recent  payslips and bank statements. Once you’ve provided the required documents,   your initial application can be submitted by  clicking the relevant button. You’ll then be   shown a provisional list of the lenders and  home loan products you might be eligible for. If you like the look of one of them specifically  and want to apply for it, one of Compare the   Market’s Home Loan Specialists will begin the  process of verifying the information you provided   as part of your home loan application.

This could  take a few hours or it could take a full 24. If your Home Loan Specialist determines that  you are eligible for your chosen home loan and   that the loan is in your best interests, you  will be sent a Credit Proposal and Summary   of Requirements document which provides an  overview of your personal circumstances, goals,   objectives and, of course, a suggested lender and  product. It’ll then be on you to review the form,   make sure everything’s in order,  and sign off on it via DocuSign. And then that’ll be that!

Compare the Market  will send your application to the lender for you,   meaning you can simply sit back and  look forward to receiving a formal   loan approval. The time required to process  a home loan application will vary by lender,   but it’ll usually take a few business days. Nice work! You’ve completed a home loan  application with the help of Compare the   Market.

If you have any questions along  the way, remember their team of Home   Loan Specialists is only ever a call  away, so don’t be afraid to reach out. Goodbye, and whether you are buying or refinancing,   congratulations on finding a  great deal on a new home loan.