Home Truths /Understanding the home loan process

5 steps to understanding the home loan process when buying

3 min read | 22 Jun 2022

Hero-Understanding the home loan process
Hero-Understanding the home loan process

Getting a home loan isn’t as hard as it may seem.

Here are 5 steps to guide you through the process.

It’s generally a fairly standard process across the board, although we like to think it’s much easier and faster at Athena! Once you’re familiar with the process, it’s pretty straightforward. Have a read of these steps to getting a home loan, so you’re one step ahead when you’ve found the right place to buy.

Step 1: Applying for a home loan pre-approval

Going to open home inspections can be exciting, but you want to know you’ve got the money ready, so you can pounce before someone else does. That’s why getting a thumbs up from a lender in advance is a great place to start.

Applying for a home loan pre-approval is a great way to find out how much a lender will let you borrow and their current interest rate, the type of loan, your repayment amounts, and the life of the loan (number of years).

It’s not binding on you or them, but it’s the clearest to say you’re both keen to take things further together. Pre-approval is usually valid for 90 days, and it speeds up the process of getting a formal loan approval because you’ve already provided some info about yourself, like your income and assets.

With written pre-approval up your sleeve, you’re in the game and ready to make offers. Make sure it’s with the lender that suits you and your situation the most, as you’ll be in a relationship with them for a while!

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Step 2: Found your perfect property? Time to apply for a home loan

So you’ve found a fantastic place, paid a building inspector to look under the hood, haggled, and had an offer accepted – Congratulations! Time to get your home loan locked in. Here’s how:

  1. Tell your lender (the one you have pre-approval with) that you’re ready to go.

  2. Have the contract of sale ready, plus all the other docs and info for the formal loan application. See here for a full checklist.

  3. The lender will want a property valuation done.

  4. Find yourself a property lawyer or conveyancer. Read more about property conveyancing.

Check out your personalised borrowing power, repayments, and rate with Athena here. No credit checks just yet!

Step 3. Paying the deposit

To take the property off the market, you and the seller have to sign and swap the contract of sale. You also need to pay a deposit; this is usually 5-10% of the sale price. The deposit will be held in trust until settlement by either the seller’s real estate agent or your solicitor. Don’t confuse this deposit with the 20% deposit your lender will need you to have; that’s different.

Step 4: Getting a home loan final approval

You can see the finish line! Once your lender looks over your application and docs to give you the green light, they’ll send you a Loan Offer document to sign. This is legally binding; go through it with your solicitor, so you’re crystal clear on the terms you’re committing to. Once you’ve signed, it normally takes 1-5 days for your loan to be formally approved. The settlement period is generally 30-90 days, but can vary.

Now’s also a good time to get your building insurances in place. You don’t want to be left with any nasty surprises not revealed during your inspections and for it to happen during the settlement period.

Step 5: Final settlement, moving in, and celebrations

You’re at the finish line! It’s time for your lender to transfer the money to the seller, the property officially becomes yours, and you can start celebrating.

Make sure you arrange one final property inspection. Point out anything new that’s an issue, including the state the property’s been left in, and see if you can have the owner fix it. Remember, they’ll be eager to get their hands on your money, so don’t be afraid to flex your bargaining chops.

Next, make sure your financial ducks are all in a row. This means having enough money in your account to cover the stamp duty, legal and conveyancing charges, application fees (we don't charge any!), settlement fees (we don't charge any!), registration fees for the title and mortgage, plus a bit extra to cover anything you didn’t see coming. Get your solicitor to confirm how much you’ll need.

All done now? Awesome! That just leaves picking up your keys.

Deciding what’s next in your buying journey?

Even when you know all the steps to getting a home loan, it’s still a stressful process. Athena’s local home loan experts are here to help every step of the way. They're available 7 days a week.

Text - 0429 333 555

Call - 13 35 35

Or see how much you could borrow, repayments and interest rate in a few mins here with Athena.

You’ve got nothing to lose except your home loan!

Start saving a whole lotta time and money

Athena acknowledges the traditional owners of the land on which we gather the Gadigal people of the Eora nation. We acknowledge that sovereignty was never ceded and respect their continued and continuing connection to this place.