So, you have a friend whose home loan went through in the blink of an eye while yours is taking weeks. Feeling disheartened? Wondering what you have done wrong? The answer is... nothing! To put it simply, it is not you - it is them. And by them I mean the banks.
As we have mentioned in previous articles, not all clients are created equally, and neither are banks. More specifically, the bank processes and turnarounds.
What are turnarounds?
No, it's not your bank spinning in a circle (apologies, dad joke). It is the turnaround time it takes for the bank to assess your application in its entirety. This is the first point where you may experience delays in your application when compared to your friends.
While the lender they went with may have turnarounds of only 1 business day, some lenders - especially those that are offering amazing offers and interest rates - can have turnarounds as much as 10 business days or more. This is definitely a worse case scenario as banks want your business, so if there turnarounds that do get to that stage, that’s when they crack the whip on their assessors and endeavor to get it done faster (well... sometimes).
Bank Processes
The processes of each bank can also effect the time it takes for your application to be assessed. Most banks all go through roughly the same process:
Initial Assessment: This is where they confirm that you have provided them everything but the kitchen sink and they are happy to consider you for a loan.
Conditional Approval: This is issued once they have done the above. At this stage, they will order valuation and request that kitchen sink.
Final Assessment: The point valuation is returned, the kitchen sink is held and they do a final assessment and - fingers crossed - issue you an approval.
Now while all banks have the same general process, this doesn’t mean that the time it takes for each step is the same. With those processes above, each one could take a variable amount of time to be completed by the bank. Worse case - each one of those steps could be two weeks of waiting anxiously, or on the flip-side, they could be half a day for each and your approval is through within 2 days.
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I know, you are thinking, so this loan application experience has a 50/50 shot of being painful or a breeze. Well yeah! It kind of does, but there are steps you can take to at least prepare yourself.
Talk to your broker. Ask them what the turnarounds are with your selected bank and what a realistic timeframe to expect approval would be. The fact is that your broker doesn’t want this to be stressful for you, so they will be honest in their estimates and depending on the lender may even throw in a little extra just to cover the worse case scenario.
Provide Everything! Your broker will give you a list of exactly what you need for your application, so you must provide everything they ask and more. Kitchen sink, bathroom sink, laundry sink, the works. While your broker may not need all of those, at least it will be on hand and they can ensure your application is as strong and easy to assess as possible.
Finally, be patient. Yes, banks can be painful. Yes, they can take ages to simply tick "yes" but unfortunately, we need them. So be nice, take a deep breath and realise you are one step closer to your home ownership dream!