What Happens After Home Loan Approval?

Congratulations, you've successfully navigated the home loan application process, and now the exciting journey towards home ownership is about to enter its next phase. But what happens after your home loan is approved? Here’s a guide to the next steps in plain and simple terms.

1. Loan Offer and Contract:

Once your home loan is approved, your lender will provide you with a loan offer outlining the terms and conditions of the loan. This document will detail important information such as the loan amount, interest rate, repayment schedule, fees, and any special conditions. Take the time to review the loan offer carefully and seek clarification on anything you don't understand.

Once you're satisfied with the terms, you'll need to sign the loan contract and return it to the lender. This acceptance is a crucial step towards finalising your home loan.

2. What to Expect in Your Loan Document Pack From the Bank:

After your home loan is approved, you can expect to receive several documents from your lender, including:

• Loan Contract: This document outlines the terms and conditions of your loan, including the loan amount, interest rate, repayment schedule, and fees. Review this document carefully and keep a copy for your records

• Welcome Pack: Many lenders will also provide you with a welcome pack containing important information about your loan, including how to make repayments, access your account online, and contact customer service

• Repayment Schedule: Your lender will provide you with a repayment schedule detailing your minimum monthly repayment.

• Direct Debit Authority: If you've opted to set up automatic repayments, your lender may provide you with a direct debit authority form to authorise them to deduct loan repayments from your nominated bank account.

3. Settlement Process:

Good to know: It's usually a condition of settlement that building insurance is in place with the lender noted as an interested party. Banks often state the minimum sum insured to be, and evidence (a certificate of insurance) must be given to the bank before settlement is booked. Insurance protects your new investment against unforeseen events like fire, theft, or natural disasters. 

After accepting the loan offer, the settlement process begins. Settlement is the legal process where ownership of the property is transferred from the seller to the buyer. Here's what typically happens during settlement:

• Legal Preparation: Your solicitor or conveyancer will handle the legal aspects of your settlement process. They will review the contract of sale, conduct property searches, and ensure all necessary paperwork is in order

• Final Inspection: Before settlement, you may have the opportunity to do a final inspection of your new property to ensure that it's in the same condition as when you agreed to purchase it (this can differ from state to state). This is your chance to identify any issues that need to be addressed before settlement occurs

• Transfer of Funds: On settlement day, your lender will make your new loan proceeds available to the outgoing lender of the property (if there is one), with any surplus funds being paid to the seller's solicitor or conveyancer. The purchaser must make the balance of their contribution available to their solicitor or conveyancer (typically an electronic funds transfer).

• Stamp Duty and Fees: Your solicitor or conveyancer will ensure that all necessary taxes, fees, and duties, such as stamp duty and registration fees, are paid on your behalf

• Title Transfer: After settlement, your solicitor or conveyancer will arrange for the title to be officially transferred to your name, and you become the legal owner

4. Post-Settlement Considerations:

Once settlement is complete and you've officially become a homeowner, there are a few additional steps to consider:

• Budgeting for Repayments: Now that you're a homeowner, it's crucial to budget for your mortgage repayments and other ongoing expenses associated with homeownership, such as council rates and maintenance costs

• Transfer your utilities: Make arrangements to transfer utilities such as electricity, gas, water, and internet into your name before moving into your new home

• Enjoy Your New Home: Remember to, take a moment to celebrate your achievement and enjoy settling into your new home!

This information has been prepared without considering your objectives, financial situation or needs. You should consider your circumstances before acting on this information.