Following the lodgement of a home loan application, hopeful borrowers are often keen to know what will happen next and how long it will take for them to receive the verdict. The bad news is that there is no one-size-fits-all answer. The good news, however, is that a solid application is the key to keeping the approval time short.
The amount of time it takes for you to receive a response to your home loan application can vary. An answer is usually received between two days and two weeks, depending on a range of factors. For a straightforward application, it’s 48 hours to a final approval. But, depending on how complex the circumstances are, it can take longer.
Before offering conditional approval, your potential lender will need to make an assessment of your application and conduct a valuation of the property. Of course, having a valuation that is acceptable to the lender done in advance will expedite the process.
The intention of a valuation is to support an application rather than to break it. There are a few things that can result in an application not being approved based on valuation, like zoning, property size, or if the condition of the property is poor enough that major repairs would be required before it could realise its market value.
The lender will also assess your capacity to repay the loan amount you have requested. This is where all of the information about your salary and liabilities come into consideration, and where accurate and complete information is essential.
The credit review process by the lender can result in requests for further information between the customer, the broker and the lender due. Your potential lender makes an overall judgement of you as a borrower and the complexity of your financial history will affect how long this takes.
The biggest red flag is non-disclosure of liabilities or adverse information on a credit history, whether it is included in documentation or not. It’s best to be full and comprehensive in the disclosure from a borrower’s perspective.
The complexity of the application process is a great reason why you would sit down with a reputable broker, as they can just explain all of that to you.
Following the submission of an application, you can expect your finance broker to be in touch with you to update you on progress, and to notify you of the outcome. If your application is approved, your broker will also advise you of when to expect a formal letter of approval from your lender.