Understanding Loan Applications

15/08/2014



W Financial are cutting edge mortgage strategists, who specialise & are passionate about property investment... It’s run by award winning broker and successful investor Michelle Coleman. They’ve written over $500 million dollars in investor loans and the company maintains a stellar reputation, as group of intelligent, proven mortgage strategists, with Michelle at the helm helping investors start, maintain and grow their property portfolios... To learn more from W Financial and to find out how they can help you, visit WFinancial.com.au
 or call today on 1300 891 714

As an investor it’s important to base your finance strategy factors outside of just getting “the best deal.” As specialists in finance strategy, we believe that to serve our clients the best way imaginable, and to actually get them “the best deal” possible, it’s about looking past simply the mortgage strategy. Through our wealth of experience as investors ourselves, we look at putting a foundation in place even before the actual loan process begins – a foundation of proactively getting to know our clients through their ultimate investment strategy and goals, through understanding their legal structures, tax set up, as well as gaining insight into asset protection and risk management procedures they have in play already. It’s never just about the best interest rate. At least it shouldn’t be anyway.
 
What’s critical for any investor to understand first and foremost when it comes to the application process of any loan is that time frames can vary heavily due to the nature of moving pieces involved throughout the process. These moving pieces include the lender choice, valuer commission, and of course the actual complexity of the loan application itself.   It’s best to always do as much research and preparations at the onset to minimize any delays and of course optimize the chances of approval.
 
Doing this initial legwork creates the platform to then begin the process of a strategic loan application. We can then move forward into selecting the most suitable lender with the right loan product after painting the bigger picture of your unique investor profile.
 
When going into a loan application, it’s smart and important to know how much your current properties are valued at before moving forward. In doing so you will achieve total clarity around your financial position, as well as avoid unnecessary credit checks if a valuation comes in low.  In the current market, valuations can vary from one valuer to another up to 20-30% so using lenders that allow upfront valuations is a good idea. The typical turnaround from request to report for valuations is 5 business days; this report will be valid for the next 3 months only.  All that said, if you’re going into the market for the first time then you don’t need to worry about this just yet but keep it in mind for the future.
 
It’s hard to speak for other brokers, however using ourselves as the baseline, your loan application would be lodged to the lender within 24-48 hours of receiving all of the required documents that need to go with your submission
 
The actual process from this point forward is relatively straightforward – upon receipt on the lender’s end, it’ll usually take up to 3 hours to receive and log the application and upload the supporting documents which are then put in queue for the credit team to assess. The broker will receive confirmation that it has been received by the lender within 24 hours. From that point it usually takes 2-3 days to get a ‘conditional approval’.
 
Wondering what ‘conditional approval’ means? Basically as brokers we receive a conditional approval from the lender once they’re almost happy to go ahead. It basically outlines the final bits and pieces of outstanding matters that require attention before moving forward and granting you an unconditional approval (this is also called formal approval or full approval to be extra clear.)
 
The funny thing with applications sometimes, is that often a broker will have to make unusual or seemingly absurd and unnecessary requests. Just know that this is the lender’s request and not a joke or strange pry! You just have to think – how much would you need to know about someone before you were comfortable handing over 6 or 7 figures? 
 
Mortgage brokers are on your team and will go into “battle” for you to get your application approved.  A good broker will always lodge with a lender they expect to get approval with, based on their knowledge and experience around a lender’s specific lending policy.   We often have to go back and forth to get some credit assessors to understand areas around your application like income, though this doesn’t mean the application is a dud, just that we sometimes encounter different interpretations of policy. 
 
After all of this, once a lender has received and is satisfied with all the conditions (and strange requests) they then issue a full approval that’s valid for 3 months. If you are in the middle of a purchase, a broker will contact your solicitor/conveyancer to confirm written finance approval has been received from the lender. If refinancing we will send the discharge authority from your existing lender (if different) so they will be ready to settle as soon as you return your mortgage documents.
 
Upon receiving the mortgage documents you’ll then be required to sign off on them and return them to the lender within 5 days. It’s highly advised that upon the receipt of the mortgage documents you advise your broker that you in fact have them and you then make a time to go over and review it all with them.
 
Finally you’ll start to approach the business end of the process where the champagne comes into play! Shortly after you have returned your correctly signed mortgage documents – usually 2 to 3 days; your solicitor/conveyancer will contact the lender in order to book in a settlement. Your solicitor will also let you know what funds you will require to complete the settlement and how they require these to be transferred to them.
 
In the instance of refinancing, between 2 and 3 days after you’ve returned your correctly signed mortgage documents, the lender will liaise directly with your existing lender (if different) to arrange your property refinance. Just so you know – your existing lender may need up to 10 working days to prepare a discharge of their existing mortgage and arrange a settlement.
 
From there it’s pretty much a straight run home! Settlement would have then been affected after all that your loan should now be in place!
 
If that sounds like a mission… and if you’re wondering how on earth you even go about selecting the right broker to set up your next or your first mortgage then we have just the thing for you. Click here and download our eBook on the critical things you as an investor must know before you chose a lender. The eBook is 100% free and will make your journey as a property investor just that bit easier.

Disclaimer: information supplied by W Financial. While due care is taken, the viewpoints expressed by contributors and/or sponsors do not necessarily reflect the opinions of Your Investment Property.

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