Article by Patrick Lynch, Head of Operations
Previously, when we discussed the near-perfect application, a 15-day turnaround from submission to settlement for a refinance was a great outcome. But most applicants won’t have the same experience; no two borrowers (or strategies, Lenders, etc.) are identical. Generally, it can take about 4 to 6 weeks from pre-application to settlement.
We thought it might be interesting to show you the broker process and timing – to see what your Broker does (and you don’t have to) to ensure a smooth application.
Getting a loan isn’t as easy as ordering an Uber…
Pre-application:
You’ve arranged and attended a meeting with the Broker to discuss your requirements and financial position. Post-meeting, the Broker researches the market to find the “best” loan for you, perhaps work-shopping with various Lenders to find the best fit on policy, service, etc. – remember it isn’t always about the lowest rate.
Once your strategy and structure has been determined, and your financial information loaded into the electronic application, your Broker will provide the application forms and a list of supporting documents (e.g. payslips, bank statements, etc.) needed by your Lender. It is important to provide correct and up-to-date documentation, as failure to meet the Lender’s requirements could delay your application. Everything in order – your application is lodged.
Total time – 5 days. Broker time – 6 hours.
Assessment:
The Lender completes a pre-assessment check, confirming you’ve provided the right information, and your application is then passed into the assessment queue. Different Lenders have different service levels – some will pick up the file within a day, others might need more than a week.
It is common for the assessor, on review of all information and latest policy, to seek clarifications. These can be due to misunderstandings of the application, but sometimes the Broker has additional work before approval can be issued – e.g. discussions with the Lender’s assessor and Business Development Manager. If there is anything the Broker cannot directly address, they’ll contact you. Once supplied to the Lender, the application goes back into the assessment queue.
At this time, you might get ‘Conditional’ or ‘Pre’ Approval, with the only condition a valuation. It can take up to 7 days across valuation order, inspection and report depending on the nature of the property (own home or investment), estimated value, and whether a full inspection (taking 15 minutes) is needed. Your Broker may have been able to order this prior to submitting the application. If you borrow more than 80% of the property value, your file may also need to be reviewed by the Lender’s Mortgage Insurer provider, adding a further few days.
Once all conditions have been met, ‘Formal’ or ‘Unconditional’ Approval will be issued.
Total time – 9 days. Broker time – 4 hours.
Loan Offer Documents:
A few days after Formal Approval, the Lender or their settlement agents prepare and issue the loan offer documentation. Some Lenders offer the convenience to complete and accept online, but most are paper documents. These can appear complicated without proper guidance and your Broker is available to assist with signing, or you can get independent legal advice.
Return the signed documents with any settlement requirements (e.g. insurance) to your Broker. As with the pre-application process, your Broker will package everything for return to the Lender, e.g. ensuring the documents are complete and that the settlement conditions have been met.
Total time – 5 days. Broker time – 3 hours.
Settlement:
The Lender will review the loan documents and, all being in order, contact either your existing Lender (refinance) or solicitor/ conveyancer (purchase) to make settlement arrangements. You may need to contribute funds to complete settlement. Settlement itself doesn’t need your attendance – the Lender does this automatically. Throughout this, your Broker is updating you, contacting the Lender and/ or their settlement agents, your conveyancer or existing Lender, to address any final items and line up all parties to achieve settlement.
There might be some post-settlement actions that need your attention such as moving funds to maximise offset benefits, and your Broker will complete checks with the Lender and email you a full summary once settlement is complete, but otherwise you’re done!
Total time – 6 days. Broker time – 2 hours.
Conclusion:
From the above, you can see how a few days’ delay and weekends can add up to 6 weeks.
Your Broker is likely to put in 15 hours to prepare and present your application in the best light and see it through to completion.
They know how to structure your lending, working alongside your other professional advisors (accountants, solicitors, etc.). They will keep you informed as your application progresses, with clear communication and timelines. Occasionally, they can request escalations. Your Broker will liaise with all parties to ensure a smooth run, limiting your time on the treadmill to a few hours.
Imagine doing all this yourself – researching several Lenders and their products before lodging an application, only to be knocked back because you didn’t 100% meet policy, then starting again! Getting an approval, reviewing the loan documents (or asking a solicitor to do so, with the time and expense involved), then liaising with all parties connected with the loan process before settlement is achieved! And the Broker is still there to help post-settlement…
Long Property blog content provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Nothing on the Long Property website constitutes legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
