How to rethink the loan approval process

If you want to buy your first home but the loan process has you baffled, we’ve gathered some tips and tricks to get you on your way.

Most of us believe that getting a home loan will be harder than it was in a time before COVID. 

We asked home loan experts at NAB how buyers can rethink their strategy to get approval quicker and into the first home sooner than expected.

Gather your documents

Mobile Home Loan Specialist at NAB, Belinda McGovern, says the first step is opening communications with your lender to understand what you need. 

Whether hard copy or on your hard drive, it pays to have a filing system when it comes to loan documents. Picture: Getty

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“Customers need to be informed by their banker on the information required for the application,” she shares. “Once we have all the information required, we can submit your application for approval.”

You’ll need 100 points of identification (an example of this is a birth certificate, driver’s licence and Medicare card), bank statements, payslips, stock portfolios, tax declarations and credit card statements, to name a few.

NAB has this handy list to help you out.

Get conditional approval

Conditional approval – or pre-approval as it is sometimes known – is when a bank indicates the amount you are able to borrow prior to you finding a home to buy.

As the name suggests, it’s ‘conditional’ on you supplying documents to substantiate a formal application for a home loan and a valuation of the property.

Conditional approval gives you some security and knowledge as to what you can realistically afford. It can help streamline the process once you do eventually purchase a property. If you don’t have pre-approval, the full loan approval could take a while and delay the purchase.

NAB encourages you to apply after doing some initial research, including using online calculators to estimate your borrowing capacity, thinking about what you can afford to repay and doing a bit of research into the different home loan packages available.

Andy Kerr, NAB Executive Home Ownership says as soon as you start thinking about buying a property, it’s a good idea to have a conversation with a banker.

“[Our bankers] will provide property insights, support through the process as well as understanding of your individual situation, to determine the most suitable options for you,” he says. “Organising pre-approval is the first step so you can make an offer with confidence.

Take advantage of tech

One way that home loans have changed this year is that they are more friendly for those who want to manage processes online or over the phone.

Nowadays you can apply for a loan online. Picture: Getty

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“We have had many changes this year due to COVID-19 that makes the process faster and clearer,” McGovern notes. “[For example], we have more mobile bankers and after-hours appointments.”

Applying for conditional approval online means you do not have to leave your home and you’re also unrestrained by traditional hours of operation. You could start your application in your lunch break and finish it at 11pm at night – whatever works!

Understand the property search

Some folks are under the impression that buying property in the era of COVID-19 means there will be less competition. But that’s not necessarily true.

In many markets, there has actually been higher competition and demand. So you need to be prepared to act to avoid disappointment, cautions McGovern.

“More people have been actively looking this year due to government incentives,” she says. “Demand seems to be higher.”

You may be sharing your prospective dream home with 20 other buyers. Picture: realestate.com.au/buy

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The property landscape of the area you are looking in can affect your loan application in a few ways. It’s good to be aware of this and find out how this could affect you. For instance, pre-approval will typically have an expiry date. If it’s running out, you’ll need to request a renewal, so you are prepared to continue making offers and purchase that property.

Apply for your grants

Are you eligible for a First Home Owners Grant? You’ll need to apply for any grants separately to your home loan. However, in many cases, your lender can assist and do this for you. Too easy. You can learn more about current government grants and schemes available to home buyers here.

Forms are available through your state revenue office or government website and you’ll need proof of identification, the contract of sale (for the home being purchased) and any other relevant documents that prove your eligibility.

A NAB home loan specialist can answer any questions you have and can guide you through the entire process. The NAB Appointment Booker tool makes it easy to book a time to talk to a home loan specialist. Make your appointment online now at nab.com.au/book

The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, National Australia Bank Limited ABN 12 004 044 937 (NAB) recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article. NAB’s credit products are subject to terms and conditions, fees and charges and lending and eligibility criteria (available upon request). ©2021 National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686