Understanding the home loan process

Use this step-by-step guide to understand the home loan process, before u loan.

Step 1: Determine your borrowing capacity

Before you start house-hunting, it's essential to know how much you can borrow. This depends on your income, expenses, and creditworthiness. You can use online calculators or consult with a mortgage broker to get a rough estimate.

Step 2: Save for a deposit

A deposit is usually required when buying a home. The bigger the deposit, the better, as it can impact your interest rate and loan-to-value ratio. Aim for at least 20% of the property's purchase price. 

Step 3: Explore loan options

There are various loan types, such as fixed-rate, variable-rate, or interest-only loans. Each has its pros and cons. A mortgage broker can help you choose the right loan based on your financial goals.

Step 4: Gather documents

Make sure you have all your financial paperwork in order. This typically includes proof of income, bank statements, identification documents, and other financial records. 
Step 5: Get pre-approval

Obtaining pre-approval gives you a clear budget to work with when house-hunting. It's essential for knowing your financial boundaries and can also make your offer more attractive to sellers.

Step 6: House-hunting and making an offer

Now comes the fun part! Search for your dream home and, when you find it, make an offer. Your pre-approval can strengthen your position during negotiations.

Step 7: Formal loan application

After your offer is accepted, you'll need to submit a formal loan application to your chosen lender. This involves providing documentation to support your financial position.

Step 8: Valuation and loan approval

The lender will assess the property's value through a valuation process. Assuming the property meets their criteria, they'll approve your loan application. 
Step 5: Get pre-approval

Obtaining pre-approval gives you a clear budget to work with when house-hunting. It's essential for knowing your financial boundaries and can also make your offer more attractive to sellers.

Step 6: House-hunting and making an offer

Now comes the fun part! Search for your dream home and, when you find it, make an offer. Your pre-approval can strengthen your position during negotiations.

Step 7: Formal loan application

After your offer is accepted, you'll need to submit a formal loan application to your chosen lender. This involves providing documentation to support your financial position.

Step 8: Valuation and loan approval

The lender will assess the property's value through a valuation process. Assuming the property meets their criteria, they'll approve your loan application.