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Yes, it’s credit squeeze time and that means home loan approval times have blown out from 6 weeks to 9 weeks. The post-Royal Commission crunch has resulted in increased regulatory scrutiny of home loan applications and an uptick in lenders requesting more supporting information before approving a loan. If you’re not keen on waiting, here are 7 things you can do to minimize delays to get approved faster.
The more equity (if you’re refinancing) or deposit (if you’re buying a new property) you hold, will put you in a much stronger position from the lender's point of view.
The more deposit or equity you hold means you’ll have a lower LVR (loan to value ratio), ideally below 80%. Lenders want to know you’re not a risk to them and a lower LVR means you have a larger stake in the property and more to lose if you ever did default. An LVR above 80% is generally the cut off for needing to pay Lenders Mortgage Insurance and high LVR loans can sometimes come with higher interest rates.
Gathering your documents is perhaps one of the most time consuming parts of the home loan application process. You’ll need to provide documentation to confirm your identity, your income and expenses, as well as your assets and any existing loans you may have.
If you provide incorrect or out of date documents your application will likely incur delays. The primary documents you’ll need to provide are:
You can get a full breakdown of the documents you’ll need to provide here.
These days lenders are taking a forensic look at borrower expenses so make sure to declare everything from eating out and takeaway, to taxis and Ubers.
Lenders will review your bank statements in detail as part of assessing your loan application. If they spot enough significant expenditures that were not declared in your application, they may ask for more information regarding these expenses.
Whether you’re planning on refinancing or buying a new home, it’s important to keep in mind that your recent expenses will be examined and be more mindful of your discretionary spending and in particular recurring expenses such as gym memberships and Netflix subscriptions, as well as betting and gambling spending.
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Got a credit card you’ve never used? You still need to declare it. Don’t forget to include details of all loans or debts under your name, no matter how big or small.
And yes, this does include any active credit cards that you have paid off, minor short-term loans, payday loans, and any outstanding AfterPay payments you need to make. Forgetting to declare these loans can cause delays in processing your loan.
These days, lenders are being extra cautious and as a result are regularly asking for extra information from prospective borrowers. Don't worry if you get such a request, just as you think your document gathering is over!
Nowadays it's quite common for lenders to ask borrowers for extra information such as extra bank or loan statements before approving a loan. All you can do to speed up the process is to be prepared for the unexpected and act quickly when more information is requested.
You’ll be notified immediately if your lender requires more information and you can check your loan’s status anytime 24/7. You can complete your application quickly and in your own time online and avoid time consuming trips to the bank by securely uploading and verifying your documents using an online home loan platform (like ours).
Sometimes lenders change their policies and restrictions after you have applied. While this is frustrating, it is out of your control.
The good news is that there are always more options. We work with a bunch of lenders who offer more than 2,000 loan options. If your loan isn't approved the first time round, your Home Loan Specialist will work with you to find a more suitable option that is still a great fit for you.
Our experts will help you search, choose and settle online.
Our goal has always been to make the home loan process more efficient. If time is of the essence and you’re concerned about potential delays for your particular situation, then chat to one of our friendly Home Loan Specialists. We’re more than happy to help.
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