Home loan applications and contracts

Documents and information you’ll need

Before your lender can properly assess your application, they will need a few documents from you, including:

• proof of identity (e.g.  passport, driver's licence, birth certificate, utility bill or rates notice)
  
• evidence of your income (eg. most recent payslips) and assets (eg. bank statements)
• details of outstanding debts, like credit card or loans, including how much you owe and your repayment amounts
• proof that you can pay the deposit and you have a savings history (eg. bank statements)
• your monthly expenses, including school fees, rent, dining out and regular bills like utilities
• proof of employment (eg. address and contact details of employer).

Application process

After receiving your application, lenders will usually follow these steps:

• Contact you to talk through your application and help you to find a lending arrangement that suits you.
• Review your application and documents to ensure they are in order.
• Do a credit check (using a credit reporting body).
• Get a valuation on the property you want to secure.

You may be granted conditional approval, subject to various checks (eg. verification of the information you have told us about your financial position, and valuation of the property).

With conditional approval you should feel more confident to bid or make an offer on a property. But ensure you properly understand the conditions of this approval prior to making an offer.

It can take a few weeks to finalise the loan application and assessment process. Use this time to organise checks on your property with the guidance of your solicitor or conveyancer.

Offers and sales contracts

When you’re interested in a property, and considering an offer, it’s important to seek independent legal advice. Each state and territory may have different buying processes, so it might be a good idea to check your state or territory’s government website for further advice.

Ask your solicitor or conveyancer to review any legally binding documents (including your home loan contract) as they can advise you on any issues to help make a considered decision.

Once you make an offer, sign a contract and pay the deposit, you must buy the property on the settlement date, unless you make that offer subject to conditions. The most obvious condition is ‘subject to finance’. If you don’t go ahead, there may legal and or financial consequences (eg. forfeit of deposit).

You should speak to your solicitor or conveyancer to confirm any other conditions that may be relevant (eg. building or pest inspection).

If you’re buying at auction, you may not have an option to make the purchase subject to conditions.

Whatever conditions you set, it’s a good idea to ask your conveyancer or solicitor to write these conditions into the contract for you.

Home loan contracts

Once you have formal approval for your home loan, you’ll receive a loan contract to accept. Like any legal document you should get independent legal advice before you accept and sign. Make sure you understand the details by asking your lender and your solicitor or conveyancer questions if you’re unsure of anything.

Your contract will usually include:

• details of the security (eg. the property details if you are using the property as security against the loan)
• the loan amount
• details of your repayments, including repayment type (eg. interest only or principal and interest), the repayment amount, frequency and the fees and charges for the loan
• interest rate and interest rate type
• the loan terms and conditions.