The process of securing a home loan through a broker
According to 2016 Deloitte research, prospective home buyers are using mortgage brokers to secure home loans because they expect brokers will save them money and assist them through the home loan application process.
If you decide a broker is for you, you’ll engage with them in a number of key stages throughout the application process and beyond.
Your broker will consult with you to establish your financial and lifestyle goals, responsibilities and commitments. You may have an idea in your mind of what you want, and the first meeting with a broker can help you refine this and develop an action plan to make your aspirations a reality.
After reviewing your financial circumstances, your broker can determine your borrowing capacity and they can outline repayment scenarios. They must make reasonable enquiries to check if proposed products are suitable for you. They can also put you in touch with a variety of other complementary service providers, such as financial planners, real estate agents, lawyers and property agents, who will also help you achieve your goals, as and when required.
In preparation for a loan application you will need to supply some supporting documents. Examples of these documentation you will typically provide include personal ID, evidence of your income, proof of savings and details of existing financial obligations. (Click here for more information on required documents). Your broker is required to maintain confidentiality of the information that you provide and only pass it on where necessary to secure your finance or where required by law.
Your broker can also consult with you to explain how features, fees and charges attached to your loan options compare and affect the overall amount you will repay on your loan.
Once you’ve consulted with your broker to determine your preferred loan, they will submit your application and documentation to the lender.
Before you seek full home loan application approval, it’s also common to apply for home loan pre-approval.
By signing a contract on a property prior to securing unconditional approval, you run the risk of forfeiting your purchase deposit if your subsequent loan application is declined. Pre-approval is less onerous than the full home loan application and gives you a good preliminary indication of your borrowing power. Your broker can assist you with applying for pre-approval as a step to help you determine which property price bracket may best suit you.
Your broker will let you know when your lender has issued an unconditional approval on your loan application.
Approval and settlement
After your home loan application is approved and settled, your broker will follow up with you to ensure you understand how to pay the loan and to answer any enquiries you might have.
It’s also common for your broker to contact you regularly, offering to check that your loan still suits your needs. It’s possible, for example, that you might be better off switching from a variable to a fixed interest rate loan, or switching products for a better deal. Your broker will help you with this decision by maintaining long-term contact.
The more aware you are of the support your finance broker has to offer in the home loan application process, the better positioned you are to navigate the process comfortably and successfully.