Time to read : 4 Minutes
Buying a property can be life-changing, but applying for a home loan can be daunting, especially if you're new to the process.
When I worked as a broker, I always warned my clients to be wary of claims regarding ‘quickie home loans.’
That said, digitising parts of the home loan application process has improved home loan assessment timeframes. Let’s take a look.
What are the loan approval times?
The usual timeframe for a lender to fully approve a home loan is 14-21 days from the date of your application.
This timeline varies, based on your lender, and the complexity of your loan. Can you get it done in five minutes? Rarely.
Some lenders have larger assessment teams than others, and some have streamlined their processes with online IDs and ‘loan triage’ algorithms like Tic:Toc (no, the other one - now called Tiimely).
Some banks can offer approvals within an hour and other banks do not. Chat to your broker if you require urgency as the lenders that offer a one hour turnaround time might not have the most competitive rates on the market.
At the moment, most automated loan application systems still employ human loan assessors as well.
What can you expect a typical home loan process to look like?
Submission: getting your completed home loan application together can take 7-10 days, or more if you’re required to chase down additional documents.
Loan assessment: the more complex your financial situation, the longer your assessment will take.
Complexities include:
Borrowing more than 80% of your property’s value.
Borrowing with a guarantor.
Unusual employment situations (eg casual or freelance work).
Borrowing through a trust, company, or SMSF.
Conditional approval: this usually follows your successful loan assessment. This is where you’re approved, subject to some conditions being met. The most common one is your property valuation, but other conditions can include:
Cancelling one or more credit cards.
Settling a personal loan or other outstanding debt.
Property valuation: your lender may use any of these valuations:
Accepting your contract of sale as the valuation.
Kerbside Valuation, ie the valuer drives by to assess your property (yes, really).
Full valuations take the longest. They’re often done where a local area has so few sales, it’s hard to get an average price, or where your broker has insisted on a full valuation in order to get you a better loan offer.
Formal loan approval: this is your Unconditional Approval – and the moment you exhale.
Important note: These are generalised timelines. Your lender may take more or less time at each stage.
How does a loan pre-approval fit in?
A pre-approval is an ‘in principle’ agreement to loan you a certain amount, for a certain type of property and it’s usually valid for 90 days. It’s not legally binding in any way.
Be aware: it’s possible to be pre-approved or pre-qualified for a loan in 60 minutes, but this does not mean you’re formally approved. Your application still needs to be fully assessed.
5 ways you can speed up your home loan approval
1. Talk to your broker first
Your broker can explain your borrowing position and help you avoid lenders that over-promise and under-deliver on turnaround times. They’ll also tell you what paperwork you’ll need, so you don’t get surprised by an eleventh-hour delay.
2. Get your paperwork together
Gather all necessary documents, such as payslips, passport, driver’s licence, and bank account statements for the past 3-6 months. Include credit cards, BNPL accounts, and proof of other income sources (like child support).
3. Maintain the status quo
Avoid major life changes, like starting a new job, just before applying for your loan. Stick to your household budget. Avoid any new debt and late bill payments.
4. Double-check your application
Ensure you’ve provided all requested information, even if it seems minor. Complete any online forms accurately and honestly.
5. Work with a broker on your lender’s priority service
Brokers with priority service have faster turnaround times and shorter settlement periods from some lenders.
By following these steps, you can help ensure a smooth and timely home loan approval process. If you’re interested in finding the best home loan without the hassle, let the experts at Compare Club help you.
Bottom line
While the thought of having a home loan approved in just five minutes sounds tempting, you know what they say: if it's too good to be true, it probably is.
Given the amount of paperwork, compliance and due diligence that should go into a home loan approval process, it’s not an entirely bad thing that it usually takes at least 14 days.
Afterall, most people are signing away their savings for the next 25 years or so.
Go deeper:
Why your property valuation matters as much as your home loan interest rate
What does a lender look at in a basic home loan application?
Financial Disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
