There is a sense of belief that once your loan approval has been issued, the hard work is over and you’re finished with your home loan application. However, there are a few things you will need to handle to ensure you progress toward settlement and meet the conditions of the contract. If you don’t address these items with your broker in a timely manner, you could miss the settlement deadline and incur a lot of penalty interest…or worst of all, a terminated contract.
Upfront deposit
At the expiration of the cooling off period (usually two business days) pay the deposit (usually 10% of the purchase price), unless an alternative amount is agreed upon. Payment is made to the real estate agent for deposit into their trust account. Ensure you obtain a receipt from the agent. Please note that a property being purchased on auction conditions, will require the agreed deposit to be paid immediately (or the next business day).
Conveyancing
Contact a conveyancer/solicitor to act on your behalf for the transaction of ownership of the property. Bernie Lewis Home Loans works with BLHL Property Conveyancing who can provide our clients with an efficient and professional transfer of your property.
Building and pest inspection
Consider arranging a building and pest inspection, typically within the cooling off period. Make sure to liaise with the real estate agent and conveyancer, especially if any problems arise.
Insurance
As soon as possible after both you and the vendor have signed the contract, you need to review building insurance coverage for the property. In most states you become responsible for the insurance risk as soon as a contract is entered into. If you are purchasing a strata titled property, building typically isn’t required as it could be inclusive with your strata fees. You should also consider reviewing your contents insurance to protect your valuable possessions, and loan protection insurance to safeguard your family from life changing events that could impact your ability to repay a loan.
Contract of Sale
It’s important to provide the fully signed contract of sale as soon as it is readily available, so it can be submitted to your lender to start the loan approval and loan settlement process. Any required amendments to your loan application will also be submitted to your lender for assessment.
Valuation
A valuation of the property will be organised to ensure the contract price and property is satisfactory. This is typically arranged between broker, lender and real estate agent.
Loan approval
Your lender will conduct their formal assessment and relevant checks, including Lenders Mortgage Insurance approval. This could include satisfying any remaining loan approval conditions listed in your pre-approval.
The timeframe for full loan approval is dependent on the lender and valuation, but a rough guide would be up to one week without any delays or issues.
Loan document sign up
Shortly after your loan is fully approved, the lender will provide a formal loan agreement and mortgage documentation. We recommend you thoroughly read the documents and ensure you understand them before signing. If you have any questions please contact us, or alternatively, seek independent legal advice. The loan agreement sets out the details of the loan as well as the terms and conditions. Once signed, promptly return them to the lender for verification. Typically you will open the required personal banking accounts during the loan document sign up process, with an authority to debt the remaining cash contribution to the purchase. Ensuring you have all funds ready to go on settlement day, is one of the most important things to handle in preparation for settlement.
Settlement will then be coordinated with your conveyancer, who will advise their process and requirements to you directly.
*The information provided in this article is general in nature and does not take into account your personal circumstances. Since everyone’s personal situation is different, this article should not be taken as advice.
