What is the loan application process for a mortgage in Australia?
The mortgage application process in Australia typically involves the following essential steps:
Assess Your Borrowing Capacity
Choose a Lender and Loan Type
Obtain Pre-Approval (Optional but recommended)
Find a Property and Make an Offer
Loan Approval (Unconditional Approval)
Settlement Process
Mortgage Repayments Begin
1. Assess Your Borrowing Capacity
Use online mortgage calculators or consult a mortgage broker to estimate how much you can borrow.
Lenders assess your income, expenses, existing debts, and credit score.
Check your credit report to ensure it’s in good standing.
2. Choose a Lender and Loan Type
Compare different lenders and loan products (fixed vs. variable rate, offset accounts, redraw facilities).
Consider seeking advice from a mortgage broker for better deals.
3. Obtain Pre-Approval (Optional but recommended)
Pre-approval gives you an indication of how much a lender is willing to lend.
Requires submitting basic financial details but is not a guaranteed loan.
Valid for around 3-6 months.
4. Find a Property and Make an Offer
Once you find a property, negotiate the price and sign a contract (subject to finance if needed).
Pay the deposit (usually 5-10% of the property price).
5. Formal Loan Application
Submit a formal loan application with:
Proof of identity (passport, driver's license)
Proof of income (payslips, tax returns, employment details)
Bank statements and details of other debts
Property details (contract of sale, valuation)
The lender will conduct a property valuation and risk assessment.
6. Loan Approval (Unconditional Approval)
If the lender is satisfied with your financials and property valuation, they issue unconditional approval.
You receive a loan offer document to sign.
7. Settlement Process
The lender liaises with your solicitor/conveyancer to finalize documents.
A settlement date is set (usually 30-90 days from signing the contract).
On settlement day, the lender transfers funds to the seller, and you take ownership.
8. Mortgage Repayments Begin
Your first repayment is typically due a month after settlement.
You can set up direct debit payments to avoid missing repayments.