Your Loan Application

This process is straight forward as long as we all understand the requirements and the roles of everyone involved.  Keep in mind that there are many participants in the process, valuers, inspectors, solicitors, vendors, agents, tenants, insurers, yourself and your broker.  The following information is simply trying to set your expectation and ensure that you fully understand the process and potential obstacles. We rely heavily on the internet for document transfers either via our secure document upload facility or by email or fax. Only when we are certain that everything is correct will we give you instructions to express post your completed forms and documents

Under national consumer credit protection laws (NCCP) we are required to provide a range of documents including a credit guide, commission disclosure, privacy consent. We are also required to conduct reasonable inquiries to ascertain the suitability of any product that we suggest. In reality we will usually present you with a range of suitable options with detailed cost comparisons between the various products and lenders.

In order to comply with the NCCP requirements we will normally have a short telephone discussion in order to get a clear understanding of your current circumstances and your aspirations. No two applicants are the same and we will often turn up vital information, the importance of which may never have occurred to you. Once we are reasonably confident that we can assist we will probably ask you to complete an Application Assessment form and we will ask to see recent copies of your pay slips – this is a critical requirement in the process.

Once we make and you accept our recommendation we will provide you with a detailed list of supporting documents that are required. These vary from lender to lender and on the type of deal – see below. We will also provide you with a detailed quotation, commission disclosure and lender’s application and privacy consent form – I repeat we cannot proceed with an application until these are returned.

We normally prepare the formal application online using the copies of all the supporting documents that you have provided. Before submitting we will provide you with a detailed summary of the application and we will ask you to double check and point out any corrections that are required. Only then will we actually submit the application.

We then liaise with the lender in order to get the application through the approval process. Sounds simple when you say it quickly – the different stages of approval are outlined below. When your loan is unconditionally approved the lender instructs their lawyers to prepare the mortgage contract. Once these loan documents are issued and accepted by you then our role is largely complete and the settlement is usually coordinated between your legal representative and the lender.

Generally we are not authorised to discuss your offer with vendors or their agents, nor to instruct your lawyer. We will normally arrange for discharge documents for existing loans being refinanced, however beyond that we have no input into the discharge process as the outgoing lender will not recognise us or discuss your discharge with us so you or your lawyer must pursue that process. The settlement process is coordinated between your lawyer and the lender, we assist where we can however we have no role in the settlement.

Document Check List Important Tips

You will be provided with a document check list, each lender has slightly varying requirements.  Please pay close attention to providing exactly what is asked for and unless otherwise stated please ensure that documents are the most recent available. You have an obligation to disclose any pertinent information and we are obliged to inform the lender of any information we consider pertinent to your application.

If faxing please use a ‘fine’ setting and for emails we prefer pdf files and if scanning save as JPEG (jpg) file format.

• Payslips must be most recent and where multiple are required they must be consecutive – feel free to black out your tax file number. They must clearly show your employers name, your name and preferably annual salary or YTD figure that allows an accurate annual figure to be calculated.  If your pay slip does not comply please provide alternative documents (check specifics)  normally a signed letter from employer on letterhead.
• Bank statements unless otherwise stated must be original printed (not internet) statements and must be complete document (all pages) showing account numbers, balance, limit and transactions for the period specified.  Lender’s will require an explanation where credit card or overdraft accounts exceed authorised limit.
• Identity Documents(WA deals require special attention check first) copies must be correctly certified and clearly show certifiers details, document number and date of issue.  If you are an Aussie expat then Australian consular staff are almost always the best certification option – check the lender’s requirements closely.  Always scan or fax photo documents in photo mode, the image must be clear.  It sometimes helps to enlarge x 2 the image.    If your name has changed through marriage or divorce please provide a marriage certificate or other verification.  In some cases a statutory declaration will suffice.
• First Home Owner’s Grant and other government grants require you to complete additional forms and provide supporting documentation including identification. Please pay very close attention to what is specified in the application form.

Important Stages

Indicative, Pre-Approval or In-principal
An Indicative or Pre-Approval or Home seeker Loan is not a full approval.  In some cases the lender has not even checked the acceptability of your employment or income.   Also note that if your circumstances change, employment, your deposit, you enter into a car or personal loan etc, could jeopardise your loan approval.  Likewise the interest rate and product quoted at pre-approval may very well change.  Fixed rates are not guaranteed unless you have paid upfront for a rate-lock option.

Conditional Approvals
These are normally issued once the lender has viewed the full application and supporting documents.  These are usually subject to a suitable valuation report or other specified requirements.  If you fail to provide the required information the loan process will not proceed from that point.  The lender’s valuation is often the final hurdle, you do not have a loan until the valuation meets the minimum required or you can show sufficient funds to cover the shortfall. If the loan is over 80% LVR then the mortgage insurer (LMI) will need to approve unless the lender has delegated authority. Only when all stated conditions are met will the lender issue and unconditional approval – but keep in mind it is unconditional only as long as your circumstances do not change.

The cooling off period.
This varies from state to state and is stipulated in your contract. Extensions to the period can be negotiated and are very common.  Never waive your cooling off option without discussing with us and your solicitor.  Lenders make no commitment and many often fail to provide an approval within the cooling off period (some lenders are currently taking 5 days just to arrange a valuation).  If you have an in-principal approval in place prior to entering into the contract your chances are greatly improved.  Once the cooling off period expires you must either proceed or withdraw from the deal – it would be very inadvisable to continue with a contract without finance approval – the legal implications are very serious.

Loan Documents and Settlement Process
The normal settlement period seems like weeks away, please do not become complacent by that.  As some times lenders can be overloaded either with applications or system failure and this can result in extended delays – maybe weeks.  At these times lenders can use any excuse and  a single incorrect piece of information from you which if it were to happen at a critical stage can result in delayed settlement with the potential for penalty costs against you.  As many as 10% of settlements are delayed and lenders will rarely accept responsibility for any costs you incur as a result of these delays.

Please ensure that the name/s appearing on the contract of sale is exactly the same as the name used for the applicants for the loan eg: William Stuart Smith is NOT the same as William S Smith. When you receive your letter of offer check the details again for accuracy of names and addresses, loan type and interest charges.  The mortgage documents will be issued on the basis of the offer,  having documents re-issued can waste several days.   If your loan should be Interest Only – this must be correct prior to settlement as it is not a simple (cheap) matter to change after settlement.

Finally, the mortgage document is a contract and as such it advisable that you seek legal advice. You cannot modify (using initials) the contract and any changes will require a re-issue of documents with further delays so pay close attention and ensure you sign where required with appropriate witness signatures and return all documents that are not indicated as “clients copy”. The Mortgage Finance Association clearly state that mortgage brokers should not advise or offer interpretation of mortgage contracts as we are not qualified or indemnified to do so. We can assist you with clarification on interest rates and fees however we strongly advise you to seek professional legal advice on the terms of the mortgage contract.

The entire process will typically take 4 to 6 weeks, maybe longer if you are overseas. It is vitally important that once the application is approved and until settled you make no significant changes to your lifestyle, employment or other circumstances. Even a job promotion could theoretically cause and approval to be withdrawn – keep your broker informed at all times.