Secure your home loan

Finding the right property is only half the equation. Securing your home loan on time, and on the right terms, is what allows the purchase to actually settle.

At this stage, it’s not about browsing rates. It’s about managing risk, meeting deadlines and understanding exactly when your loan moves from “likely” to “locked in”.

Clarity here protects everything else.

Many buyers enter the property market with pre-approval. That’s a strong starting point, but it’s not the final step.

Pre-approval means:

• A lender has assessed your income, expenses and credit history
• You’ve been approved up to a certain limit
• The approval is conditional on a specific property

Formal approval, sometimes called unconditional approval, happens after:

• You’ve signed a contract
• The lender has reviewed the property valuation
• All requested documents are provided
• Any conditions are satisfied

A common mistake is assuming pre-approval guarantees final approval. It doesn’t. The property must still meet the lender’s criteria.

Once you’ve signed a contract, the lender moves into detailed assessment.

They review:

• The property valuation
• Your updated financial position
• Any changes in employment or income
• Existing debts or new liabilities
• The contract of sale

If the valuation comes in lower than the purchase price, you may need to contribute additional funds to maintain your loan-to-value ratio.

This is why having a financial buffer matters.

If your contract includes a finance condition, it will specify a deadline for approval.

In states like Queensland and Western Australia, missing this deadline without providing notice can make your contract unconditional by default.

Track:

• The finance approval date
• The building and pest deadline
• The settlement date

Your broker or lender should provide realistic timeframes. In most cases, formal approval takes between 5 and 15 business days, depending on lender workload and documentation quality.

Proactive communication reduces stress.

The lender will order a valuation to confirm the property’s market value.

There are three common types:

• Automated valuation models
• Desktop valuation
• Full in-person valuation

If the valuation matches or exceeds the purchase price, the loan typically proceeds smoothly.

If it comes in short, you may need to:

• Renegotiate the purchase price
• Increase your deposit
• Adjust your loan structure

Understanding this possibility early prevents panic later.

Your loan-to-value ratio, LVR, affects both approval strength and overall cost.

For example:

• Borrowing 80 per cent of the property value avoids Lenders Mortgage Insurance, LMI
• Borrowing 90 per cent may trigger LMI
• Borrowing 95 per cent significantly increases lender risk and insurance cost

LMI can cost thousands, sometimes tens of thousands of dollars, depending on loan size and deposit percentage.

Balancing deposit size against cash reserves is strategic. Avoid draining your entire savings just to avoid LMI if it leaves you financially exposed after settlement.

Once formal approval is granted:

• Loan documents are issued
• You review and sign
• Your lender prepares for settlement

Review loan documents carefully. Confirm:

• Interest rate
• Repayment type, principal and interest or interest-only
• Loan term
• Offset or redraw features
• Break costs for fixed loans

This is the point where your loan becomes real, not theoretical.

Even after approval, avoid major financial changes before settlement.

Do not:

• Change jobs
• Take on new debt
• Buy large items on credit
• Miss any existing repayments

Lenders may re-verify your financial position before settlement.

Consistency protects approval.