Following the lodgement of a home loan application, hopeful borrowers are often keen to know what will happen next and how long it will take for them to receive the verdict. The bad news is that there is no one-size-fits-all answer. The good news, however, is that a solid application with all the right supporting documents is the key to getting it approved for the first time.
The amount of time it takes for you to receive a response to your home loan application can vary. An answer is usually received between couple of days to two or even three weeks, depending on a range of factors such as complexity of the application, how much volume the lender is currently processing through and the quality of application and supporting documents submitted.
Generally for an application it can range from 48 hours turnaround for a simple application and if lender is not too busy, to the extreme of 2 to 3 weeks approval period for a complex scenario and lenders being absolutely smashed by the submission volume. What we are seeing now is if a lender is smashed, customer will need to expect delays up to 1 or even 2 weeks before the potential lender will be able to pick up the lodgement for initial review & assessment.
Before offering conditional approval:
1. Your potential lender will need to make an assessment of your application and conduct a valuation of the property. Of course, having a valuation that is acceptable to the lender done in advance will expedite the process. With valuations, the intention is to support an application rather than to make or break it. There are a few things that can result in an application not being approved based on valuation, like zoning, property size, or if the condition of the property is poor enough that major repairs would be required before it could realise its market value.
2. The lender will also assess your capacity to repay the loan amount you have requested. This is where all of the information about your salary, liabilities and living expenses come into consideration, and where accurate and complete information is essential. The credit review by the lender can include a bit of to-and-fro between the customer, the broker and the lender due to the lender’s request for further information as that credit review takes place.
3. Your potential lender makes an overall judgement of you as a borrower and the complexity of your financial history will affect how long this takes.
It’s best to be full and frank in disclosure from a borrower’s perspective. From lender’s perspective the biggest red flag is non-disclosure of liabilities or adverse information on a credit history, whether it is included in documentation or not.
The complexity of the application process is a great reason why you would sit down with a broker as they can explain the overall process in detail to you.
Following the submission of an application, you can expect your broker to be in touch with you to update you on progress, and to notify you of the outcome. If your application is approved, your broker will also advise you of when to expect a formal letter of approval from your lender.
…And that’s our 3 min Wednesday finance tip series for this week! Until next week, have a great hump day!! 🙂