What happens after you apply for a home loan

Once an application is lodged, it can feel as though it disappears for a while. Knowing the usual steps makes the wait easier and helps you respond quickly when something is needed. Timelines vary between lenders and by the complexity of each application.

1. The lender checks the application

The lender reviews your income, expenses, debts and the documents provided. They will usually make a credit enquiry, which appears on your credit report. They may ask for more information, such as recent payslips, statements or an explanation of a transaction. Replying promptly and completely is the single best way to avoid delays.

2. The property is valued

The lender arranges a valuation of the property to confirm it is suitable security for the loan. If the valuation comes in lower than expected, the loan-to-value ratio changes. That can mean a larger deposit, lenders mortgage insurance or a different loan amount. It is worth having a plan for this possibility.

3. Conditional and formal approval

Some applications receive conditional approval first, with conditions such as a satisfactory valuation or final documents. Formal (unconditional) approval follows when those are met. Check any remaining conditions carefully.

4. Loan documents

The lender issues loan documents for you to sign. Read them. They set out the rate, fees, repayments and terms you are agreeing to. If something does not match what you expected, ask before signing. For a purchase, your conveyancer or solicitor will coordinate with the lender.

5. Settlement

On settlement day, funds move between the lender, the seller’s representatives and other parties, and ownership transfers. For a refinance, your old loan is paid out and the new one begins. Your first repayment date will be in your loan documents.

Where things commonly pause

• Waiting on documents, especially from self-employed applicants or recent job changes.
• Valuations that need a second look or come in lower than expected.
• Discharge from a previous lender during a refinance.
• Conditions that need to be satisfied before formal approval.

If something goes wrong

If you are unhappy with how your application has been handled, raise it with the business first through its complaints process. If it is not resolved, you can contact the Australian Financial Complaints Authority (AFCA), a free, independent dispute resolution service.