I love talking to my clients when they have just signed a contract on a new property. I love joking with them and asking ‘what did you do today? oh you know, went for coffee, read the paper, brought a house… just an average day’
The reality is, for the majority of us, buying a house is not something they do constantly, and it can be confusing to know what needs to happy when, especially for First Home Buyers. So if that’s you, here is your 7 steps in the mortgage pre-approval process…
Step 1 Collect your paperwork
There is a list of things you will need to complete your pre-approval and some will be subject to your particular situation (for example if you’re self-employed Vs PAYG).
Having said that, there is a general list of things you will need regardless of how you’re employed etc and they are;
Payslips and Income Documents
You will need your two most recent payslips and your group certificate. This will assist your mortgage broker in separating out your base income and any other payments you may get such as overtime or allowances.
Most recent Bank Statements
when it comes to most recent bank statements, your mortgage broker will want to see the statements (and transactions listings) covering a specific period of time (typically one month from the date of application)
This can get hard, especially when some bank statements are 6 monthly, so the statement you may have could be too old to use.
To help with bank statement collection, I share a link to an online portal from CashDeck which allows me to safely collect all your statements for the correct dates and the best part is, the cost is covered by me.
This will also allow me to collect all your Loan and credit card statements as well as savings accounts which you will need to have on hand as well.
Your Identification
Naturally, if you’re applying for a loan, you will need some identification. typically a Drivers licence and passport will be enough ID providing they are both current and the information on them is correct.
A copy of your budget
Your Mortgage broker will want to see your monthly living expense is. This will allow them to provide you with a loan that will allow you to continue living the lifestyle you are accustom to.
Your budget will have all the expenses in it and make your application a lot faster however if you don’t have a budget done up, you can get a free template here.
When you use the CashDeck portal to send your bank statements, it will also do a analysis on your expenses which will allow your mortgage broker to cross reference your budget and discuss any issues that a bank or lender may query.
Your Questions
I work with a lot of First Home Buyers and one thing I love is questions. The more questions the better because I want my clients to feel like, if they have a question, no matter what it is, I am here to answer it.
So make sure you keep a track of any question, big or small and take them along to your appointment with your mortgage broker so you can get them answered.
Step 2 Meet with your Broker
This step is when you will take all of your information and questions and meet with your mortgage broker.
Within the appointment your mortgage broker will discuss:
- About you – your short and long term plans
- Needs and Objectives – what you’re looking to achieve and how
- Product requirements – loan types, features, structure, borrowing power and estimated loan repaymetns
- Financially Fit – how to pay the loan now and into the future
- Where to next – what is the next step for you
- Post appointment – a follow up email to cover key discussions in the appointment
This appointment typically goes for 30-60 minutes depending on the questions and current circumstances but it is where your mortgage broker can give you specific recommendations based on your situation.
I have First Home Buyers choose to meet with me face to face and via video link as it gives them an opportunity to have one on one time and get their questions answered, if you would like to book a time with me click here.
Step 3 Sign compliance documents
Once you have selected the lender you would like to send your pre-approval to, your mortgage broker will send you some compliance documents to review and sign.
A lot of these documents I send via your email for electronic signature, because let’s face it, applying for a loan is complex so I try to make it simple when I can, also, I like trees!
Some documents will need to be printed and a ‘wet signature’ used as some Banks and lenders will not accept electronic signatures.
Some of the documents you will receive are;
Lender specific documents
The lender will have their own privacy form they will want you to date and sign. Your mortgage broker will highlight the areas you need to sign however if you’re not sure where or why you need to sign, then make sure you ask.
Credit Quote
If your mortgage broker has any fees that you may be liable for this is where they must list it. Some fees may be related to Valuations
Some of these fees may be if you close you loan in the future or application fees ect. Before you sign the document make sure you have read, understood and discussed any fees that may be in the credit quote.
Credit Proposal and Preliminary Assessment
This document explains your current situation and why your pre-approval is proceeding to the particular lender.
This document will also cover the details you have listed in your balance sheet and monthly expenses as well as your personal situation so they need to be accurate.
The preliminary assessment will also cover what the estimated loan amount, interest rate and repayment will be for your new loan.
Credit Guide and Privacy Statement
The credit guide will explain to you how your mortgage broker gets paid and an estimate of what they will be paid. It will also show you the list of lenders your mortgage broker has access to.
It will also step out the process should you have a complaint, how your personal information is collected and how it is stored once collected.
As with all the documents, should you have any questions make sure you ask your mortgage broker before you sign these documents.
Step 4 Submit the pre-approval
This step is pretty easy for you, once your mortgage broker has all the information they need for the lender you have chosen, and all the compliance documents are signed they can submit your application.
How long the approval process takes from here depends on so many factors – it;s a bit like asking how long a piece of string is.
Your mortgage broker should be able to give you an idea before you send your application and I follow up with lenders every 2 days until we have a response so my First Home Buyers aren’t sitting waiting too long to hear from me.
My clients also have access to the Client portal. This allows them to log in and get real time updates to see what’s going on. There may be no update for them but they can at least track where the application is up to and what might be happening in the background. They can also post questions that may pop up to be discussed with the broker at a later stage.
5 Start House Hunting
This is where the real fun (and stress) starts!
Once your mortgage broker issues you with a pre-approval letter, you can use that to start house hunting.
Make sure you keep your pre-approval letter handy so you can use it when you are talking to Real estate agents to show not only are you a serious buyer but you have also done most of the hard work and you;re just a valuation away from buying a house.
A quick tip I can share is when you are housing hunting download an app which will help you keep track of the properties you have seen and you can also contact me for a free property inspection checklist here to help you on your way.
Step 6 Get a Property Report
While you’re house hunting having getting property reports will help you to get an idea of the property you are looking to buy as well as other property in the area.
I talk a lot about proeprty reports on my social media and the reason is, they are so great with so much information.
I have had First Home Buyers looking at proeprties with no list price, how are you to know if it’s even worth going to the open home on Saturday or if it’s well out of your budget? a property report will give you a good idea.
Step 7 Get an Open home App
Technology is so good these days, and at times I wonder what we did before we had phones that are computers.
I recommend all my House Hunters download an app to help them record vital information when house hunting. I even have some House Hunters who would prefer the good old fashion pen and paper.
Regardless of your method having a way to record your pros and cons, the things you loved about the property and any concerns is a godsend later that day, 5 open homes later when you’re trying to remember if it was the one with the floor boards that had the pool or the one with the green gate.
Help for First Home Buyers
I am launching The First Home Buyers Program in November which will cover off on the home buying process as well as saving for your deposit and how to structure your banking to save money and more.
You can register your interest now and get a discount when we go live, simply click here.
I also have a free First Home Buying Checklist which covers the steps to take when you want to buy your First Home, to get a free copy simply register for The First Home Buying Program here
As always, if you want to chat to me about buying your first home you can book a time here.
Don’t forget to listen to the Podcast to get more information and hear more hints and tips, you can check it out here.
If you prefer videos, check out the YouTube channel where I share finance tips for everyone, click here.
You can also follow me on Instagram or Facebook and check out some client success stories, what it’s like to be a mortgage broker and updates on what’s happening in the finance industry and (more importantly) how that impacts you.