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Every home loan application is unique, so the time between your first contact with your broker and approval can never be predetermined.

If an application is not completed correctly, you risk delays in approval, or even being declined by potential lenders. There are, however, some things you can do to help the process move quicker.

The most common reason for a delay is a lender’s turnaround time to assessment, especially when some lenders have competitive offerings and experience larger application volumes, but a lack of preparation can cause this delay to snowball.

Be prepared

In order for a lender to assess your capacity to service loan repayments, every financial detail must be taken into account.

Other than the obvious documentation that needs to accompany an application – satisfactory identification and evidence of income by way of pay slips – many lenders will expect to see a reference from your employer, group certificates or tax returns, and records of any investments or shares that you might have.

If you are self-employed, you will need to organise alternative documentation to prove income, such as financial statements relating to the profit and loss of your business going back two years.

Lenders will also want to see bank statements going back a few months in order to track your spending and savings history. Most importantly, you will need to provide the details of your debts.

By having all your documents organised and a savings and repayment plan documented, as well as evidence that you can commit to the plan, you will increase your chances of receiving the loan you are after.

Disclose all information

Lenders want to see proof that you are capable of managing the responsibility of the loan, through steady employment, a good credit history and a debt-free approach to your financials.

To avoid back and forth requests, which can delay your application, ensure your lender has a thorough understanding of you as an applicant including appropriate identification of all borrowers.

Provide all the supporting and necessary documents upfront to your broker, have good, current information on your financial position and convey as much detail as possible in relation to your requirements and objectives as possible.

Your broker will not only need to have your full financial details, they’ll also need to take reasonable steps to verify them.

Skip the valuation queue

Not all applications require a valuation, depending on the property and lending institution and forgoing this step can save a considerable amount of time. You can also save time by having a valuation completed prior to your application, if it’s accepted by your chosen lender, but check with your broker first.

If you’re thinking of building your own home, you’ll need to be familiar with the ins-and-outs of construction loans.

Construction loans are not as straightforward as standard home loans. There are additional decisions to be made about the structure of the loan, additional documentation is required, and the funding is released in an entirely different way.

Documentation

In addition to documentation about your finances, income and identity, your application for a construction loan needs to include contracts or tenders for the construction, as well as the plans so that a valuation can be performed.

Further documentation will also be required before the first payment is made from the lender to the builder, including a schedule of the payments to be made (called drawdowns), the builders’ insurance details, and the final plans that have been approved by the local council.

Structure

To avoid having to contribute your full deposit and being charged interest on the entire loan amount from the moment the land purchase settles, you can split your mortgage into a land loan and a construction loan.

At settlement of the land purchase you start being charged interest and making repayments on the balance of the land loan – you may also be required to pay lenders mortgage insurance (LMI) depending on your deposit size.

The interest and repayments on the construction portion then kick in only as each drawdown is processed.

Funding

The drawdown schedule is very important; as you don’t start paying interest on each portion of the loan until it is paid to the builder, you, the lender, and the builder, need to be satisfied with the schedule.

For the lender to make each payment to the builder, you will need to fill out a drawdown request form from your lender, and submit it to your builder. The builder can then send the lender your form with an invoice for that part of the payment and, after the lender is satisfied that the work has been completed and is up to the standard expected in the valuation, the drawdown can be completed with a payment to the builder.

Any changes to the contract and plans can trigger a reassessment of the loan, so be as sure as you can that the plans and contracts the lender sees are final. It’s also worth trying to pay for any small amendments from your own pocket, rather than changing the loan and risking a reassessment.

Problems can also arise when other work on the site that isn’t completed by the builder needs to be paid for, as some lenders only make the remaining funds of the mortgage available after the completion of construction.

While some builders will include subcontractors as part of the main contract, meaning that they can be paid by the builder as stages of work are complete throughout the drawdown schedule, others will not do this. Again, this may make it necessary to pay from your own pocket.

Comparing apples with oranges doesn’t make sense. To make finding the right loan easier, and to make advertised rates as transparent as possible, there are comparison rates.

Because a comparison rate includes all the fees and charges that can be applied to a home loan, it helps to show customers what the true cost of a loan is. In some instances, lenders offering the lowest rate may not actually boast the cheapest loan, which is what a comparison rate shows.

You’re looking for the best mortgage deal and you see an advertisement. It shouts ‘3.8% INTEREST!’ and, underneath that seemingly too-good-to-be-true rate, ‘7.9% comparison rate’. What does this mean?

Lenders are required to publish a comparison rate to protect consumers and prevent them being misled when it comes to home loan interest rates. A comparison rate allows consumers to compare apples with apples, to an extent. It does make it much simpler to hold two loan products side by side and, regardless of whether one has a slightly higher interest rate and no fees, while the other is a super-low interest rate with high fees, see at a glance, which one is the better deal financially.

However, it isn’t always this simple. Fees and charges, the rate at which principle is paid down, and the total interest paid over the loan term, all change depending on the loan amount and term, so you need to delve a little further into how that comparison rate is calculated.

While the comparison rate itself must be as prominently displayed as the interest rate somewhere on the advertisement, there will be a statement along the lines of ‘Comparison rate calculated on a loan of $150,000 for a term of 25 years, with monthly repayments’. If your loan is going to be for $900,000, the comparison rate for your loan will be vastly different.

In order to get an idea of the comparison rate that applies to a loan, it is a good idea for borrowers to work with a broker to look at the comparison rate for the amount and term closest to the amount and term of their loan.