How to get a home loan

You’ll need to share details about your income so your lender can see if you’ll be able to meet your loan repayments (and a mortgage won’t put you under undue stress).

• If you’re a wage or salary earner, share either a bank statement (which shows your last two salary payments), or two of your last three payslips, or a letter from your employer that outlines your employment details.
• If you’re self-employed, share your accountant’s details, and your last two years of financial statements.
• If you’re receiving superannuation, provide either a super fund statement, or bank statement showing your income.
• If you’re receiving government income, provide either a current Centrelink statement, or a current bank statement that shows your government payments.
• If you receive income from rental properties, you’ll need to share either a current bank statement that shows this, or a current lease arrangement, or a letter from your real estate agent or property manager.
• Lastly, if you receive investment income, provide either your shareholding certificate(s), or a current dividend statement notice.

Additional documents (if applicable)

• Do you have a First Home Owner Grant (FHOG)? You’ll need to provide your completed FHOG application.
• If you're building a property or already negotiated a contract, the lender will need cost estimates and timelines, or a copy of the builder’s contract.
• Receiving a gift (money) to help you buy your home? Provide a letter from your benefactor detailing their contribution and the repayment conditions (if any).

The home loan process

After receiving your home loan 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.

Conditional approvals

Your lender may grant a conditional approval, subject to various checks (e.g. verification of the information you have told your lender about your financial position, and valuation of the property). Think of it as the first step in getting your home loan organised. A conditional approval offers a clearer picture of your borrowing limit, giving you a realistic idea of the type of property you can buy. Ensure you understand the conditions of this approval prior to making an offer or bidding at an auction. It could take a few weeks to finalise the loan application and assessment process.

Adding offer conditions

A conditional approval will help you feel more confident to make an offer in a private sale. But always ensure your offer is:

• subject to finance and valuation.
• subject to building inspection and pest inspection.

A ‘subject to finance’ clause, for instance, says that the sale (transaction) won’t proceed until the bank approves the home loan (finance). Also, whatever conditions you set, ask your conveyancer or solicitor to write them into the contract for you.

Approvals and home loan contracts

Once you have formal approval for your home loan, you’ll receive a loan contract to accept.

Your contract will usually include:

• details of the security (e.g., the property details if you’re using the property as security against the loan)
• the loan amount
• details of your repayments, including repayment type (e.g., 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.

Like any legal document, get independent legal advice and make sure to check for errors and understand the details before you accept and sign.