Popular topics:

6 minutes
Learn
Purchasing a property
Applying for a home loan

Applying for a home loan

6 minutes
  • Where do I begin? Where do I begin?
  • What documentation do I need?What documentation do I need?
  • The application processThe application process
  • Comparing loan offersComparing loan offers
  • Getting assistance Getting assistance
Currently Reading:
Select...

Applying for a home loan is the first step in the official home buying process. This is both an exciting and potentially daunting stage of home ownership, however with the right preparation, you’ll be equipped to manage the process with confidence.

In this section you will learn about lodging a home loan application, what documentation you will need, what questions you might be asked in the process.

Where do I begin?

To begin the loan application process, you will need to approach a bank (lender) and arrange an appointment with a bank representative or submit an Expression of Interest (EOI) online.

Banks usually offer in-person, online or over-the-phone appointments. Typically, there is no charge associated with original appointments or lodging EOIs.

Once you talk to a lender, they will ask you to submit a range of documents alongside a complete mortgage application form. There may be fees associated with lodging an application. See more on fees in our Common Costs to Plan For section.

What documentation do I need?

When submitting your application, the Lender will ask for a set of documents to determine who you are, your financial position now and your ability to repay a loan in the future.

Documents that may be required for your loan application include;

  • Proof of identification (e.g. passport, birth certificate, driver’s license, Medicare card)
  • Proof of employment and income (e.g. income statement showing year-to-date earnings, recent pay slips, tax returns)
  • Proof of genuine savings (e.g. bank statements showing savings from a minimum of 3 months)
  • Proof of assets (information about any other properties or assets you own)
  • Proof of current liabilities (information about debt and credit history, eg. credit score, credit card history, personal loan history)
  • Proof of rental history (eg. statement of rental history, if applicable)
  • A completed mortgage application form
  • Other relevant documents required by the lender to assess your serviceability

The application process

To begin the application process, you or your mortgage broker will be required to submit all the documents requested by the lender either online or in-person.

Principally, the lender considers the following factors:

  • Requested loan amount
  • Requested loan term
  • The security or collateral offered to secure the loan, if any.
  • Applicant's ability to repay (‘service’) the loan, including income levels and nature of employment.
  • Other expenses and overall financial stability
  • Any debts and credit limits

If you are successful, the lender will offer you a 'conditional' or 'provisional' pre-approval.

What is pre-approval?

Gaining conditional pre-approval is a written indication from your lender that you are eligible to receive home loan up to a certain limit.

However, granting a pre-approval does not oblige the lender to give you a loan. Similarly, you are not obligated to take the loan from the lender based on pre-approval.

The conditional pre-approval gives you an indication of your borrowing capacity (how much you can borrow to purchase a property). A conditional pre-approval usually lasts between 3–6 months depending on the lender. In this time, you will have to find a property to buy in your given price range or begin to organise your home build.

It is recommended that you speak with your Lender regularly during your conditional pre-approval phase to make sure you are clear about your requirements.

Can I compare my loan offers?

If you receive a conditional pre-approval offer, you may want to consider this against other lender's loan products. When considering your home loan, you can compare the following features:

  • Interest rate (per year): Interest rate (comparison rate) advertised by a lender.
  • Monthly repayment: how much you'll have to pay each month on a loan, including your principal and interest.
  • Ongoing fees: fees charged every month or year for administering a loan, also called service or administration fees.
  • Loan term: length of time a loan lasts.
  • Loan features: such as offset accounts or lines of credit, and their fees.

Remember, you will likely have to pay a non-refundable loan application fee each time you apply for a loan with another lender.

Who can assist me with lodging an application or considering an offer?

It is recommended to get independent financial or legal advice when lodging an application or considering an offer.

A mortgage broker will be able to assist you in applying for a loan. They can also assist you to review and choose between your conditional pre-approval offers.

If you have been using a financial planner or buyers advocate, they can help you along the application journey, including attending your meetings with the lender.

These services are subject to professional services chargers, always ask before engaging.

Community Legal Centre's are independent community organisations that provide free legal services and advice. Support is subject to availability.

See our Connect section for more on support services.

Share

We acknowledge the Traditional Custodians of the lands on which we work and live. We pay our respects to Aboriginal and Torres Strait Islander cultures; and to Elders both past, present and emerging. It always was and always will be Aboriginal Land.