Tips on applying for a home loan
Paul Ryan | August 16, 2017
Applying for a home loan doesn’t have to be a difficult process.
It can, however, be a time of high emotion and frustration if you aren’t aware of the process or you engage an industry expert who lets you down professionally or in the way they communicate.
As with most industry experts, the journey of achieving an outcome should start with a discussion and clear understanding of what’s required, how the process works and how they can help you achieve the outcome.
When you apply for a home loan, mortgage brokers, finance brokers or bank managers should be able to articulate the steps involved in the application process as well as communicate the issues that may or may not cause a problem or a degree of frustration.
The key message for anyone applying for a home loan is to ask questions.
Ask all the questions you’d like answered and ask the expert if there are other questions you should be asking. You don’t want any nasty surprises and the last thing anyone ever wants to hear is “you didn’t ask the question”.
If the expert doesn’t appear to be answering your questions with clarity and confidence or heaven forbid avoiding your question, then I’d suggest it might be a red flag and a warning sign to speak to another expert.
It is ok however for an expert to say I’m not sure about that question, let me find the answer and come back to you. Let’s hope they do.
As in most relationships, communication is the key to a successful journey.
Be open and let the expert know how you would like to communicate. It might be by phone, by text or email and let them know of your expectations of returning phone calls and emails in a timely manner.
Over the years I have heard some terrible stories of how the industry has let itself down.
One particular story stands out. I was in a taxi and the driver was on the phone and clearly distressed. I could tell it had something to do with a loan and when I asked if everything was ok he mentioned he paid a mortgage broker $2,000 to help him obtain a loan. Unfortunately, he hadn’t heard from the broker for 6 weeks.
To quickly explain how industry experts are paid. If you engage a bank manager they are on a salary package with the bank. If you engage a mortgage or finance broker they or the business they work for will receive a commission from the lender after the loan has settled.
As I understand there are some industry experts who operate a fee for service business. If this is the case it is very important for them to clearly articulate in writing how their fees are paid, when they are to be paid and what they have to achieve for them to be paid.
I’d also suggest you ask them if they still receive a commission from the lender when the loan settles…..mmmm.
Please make sure the fee for service agreement is in writing and you’re given the opportunity to sign and agree to the terms and conditions.
Here are some other quick tips about applying for a loan.
* The industry expert is required to prepare a preliminary assessment of your requirements and needs so they can confidently ensure any lender or product they introduce is not unsuitable for you.
* As an application form will need to be completed and you’ll be required to share your personal details (address, date of birth, marital status etc.) plus employment income, asset and liabilities and the address of the property available as security for the lender.
* You will also need to provide identification and sign a credit a consent form for the lender to complete a credit check.
* If you are an employee you will need to supply your two most recent pay slips, a group certificate and potentially a tax assessment notice.
* If you are self-employed you will be required to supply your last two years business and personal tax returns.
* If you are looking to refinance the new lender will require the last 6 months loan statements of your loan to ensure you are up to date with your repayments
* If you have been able to save the money for the deposit the lender will require a copy of your savings statement as proof of deposit.
* If you have been gifted funds to help you purchase a property the lender will require a statement to confirm where the funds have been deposited and the funds have been in your account for a 3-6 month period.
Whilst the information requested seems a lot it isn’t really when you understand the process in which lenders need to go through to approve a loan. They are required to be acting in your best interest and ensure the loan is suitable and you can afford the loan.
There are so many available opportunities for help and assistance in obtaining a loan.
Wherever you choose to seek assistance be sure to ask questions. It is your home loan and buying a property is hard enough, the home loan process shouldn’t have to make it more difficult.
I hope the home loan journey delivers a successful outcome.