Inside the mysterious life of a mortgage application

What happens once you've sent the mortgage application off?

Ever wondered what happens to your mortgage application for your property investment once it's all filled in and sent away? Waiting to hear back on whether you've got the loan can be stressful – particularly if it's your first time getting a mortgage. But as I always say, someone, somewhere will loan you the money AND if you know what to expect then waiting will be that much better!

So here it is, a day (well days) in the life of a mortgage application. Now this is typically the case but things may work differently with different lenders.

1. Mortgage application fully completed and all supporting documentation (ID, proof of income etc) supplied and fees received by lender

Filling in these forms can be confusing but we're here to help, Ezytrac and the broker they find for you will walk you through any questions you have on the application forms and ensure you get it all right the first time around to speed up the mortgage process.

2. Loan proposal submitted

Once you've sent your app form back to your broker they'll send it of to the lender and have it submitted within 24 hours. The lender will normally confirm within 4 hours they have received it.

3. Indicative approval

Don't let the name fool you, “Indicative approval” means that the lender has acknowledged that they have received your application. You'll usually get this 1 day after submission but remember you are not approved at this point.

The loan will then be checked for serviceability (can you afford to pay it) and your credit file will be checked.

4. Conditional approval, subject to valuation OR conditional approval by mortgage insurer, subject to valuation.

Depending upon the LVR (Loan Value Ratio) you have applied for your application may require approval from a Mortgage Insurer (LMI). In general this is the case if the amount you are borrowing is over 80%. In this case once the Mortgage Insurer has given your loan the nod you will have conditional approval subject to valuation. If LMI is not required you will receive Conditional Approval subject to valuation within approx. 2 days.

The lender may request further documentation etc at this point.

5. Verbal valuation received

The valuer will contact the lender via phone with the number that the property has been valued at. If the numbers are fine then it?s just a case of waiting for the valuers written report. If the numbers don't stack up your Broker can appeal by providing evidence of 3 comparable sales in the area from the last 3-6 months. This usually takes 72 hours.

6. Valuer's report received

Within 24-72 hours the valuer's written report will be received by the lender. If the LVR is over 80% the lender will go back to the mortgage insurer to sign off on the deal based on the valuation. If it's less than 80% the lender will sign off on the deal in-house.

7. Formal approval

Once the deal is signed off you will receive formal approval. At this point the deal is unconditional though it may take up to 10 days to receive written confirmation of this along with the loan docs.

This is the point where solicitors will be instructed either by your or us.

8. Loan docs sent to client

Sign, return then relax!

9. Lender receives loan docs

10. Settlement booked

Settlement times may vary between lenders states or territories and individual loans. In general the aim is to settle within 30 days of when your solicitor was instructed. Once you've settled the property is yours.

So there you have it, remember that timeframes will vary depending on which lender you go with and the type of loan. If you've got questions on any of this or want to see what products would be available to you give the team a call on +44 (0)207 923 6100.

Live with passion,
Brett Alegre-Wood

Brett Alegre-Wood
November 5, 2010


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