Your Loan Documents – What to Expect

Written by in Buying

Ultimate First Home Buyers Guide

When all your loan documents are received the lender will have to verify and validate that all of the information you have provided is true and correct. Verification requests may be sent to your employers, mortgage holder/landlord and lending institutions.

The process of a loan application usually takes about one to two weeks but can be delayed depending on the lender. If you have been approved for a loan, the lender should make you an offer by providing you with your loan documents. You will need to read, sign and return these documents so your lender can take the next steps when settlement time comes around.

When you are applying for a loan you should be sure to ask what features are offered with the loan. Loan features can often save you money and help you pay off the loan faster.

  • Can I make additional payments without a penalty charge?
  • Is there a redraw facility I can use at any time? How can I access it?
  • Can I switch between loans?
  • Is the loan transferable to another property when I move?
  • What are the repayment options?
  • Can I switch the type of loan I have (fixed, variable etc) at no extra cost?
  • How often can I make repayments (weekly, fortnightly, and monthly)?
  • Do I have a choice of principle and interest or interest only repayments?
  • How much are these feature to use?

It is important that you ask your lender about the costs of all the above features and consider how often you are likely to use these features.

What is the Comparison Rate?

It is mandatory for all lenders to publish a Comparison Rate to help you compare different types of loans. The rate helps borrowers know how much the loan will cost them per year / over a long period of time.

Before you sign for a loan you should know exactly what fees and charges will be charged to your loan account. The comparison rate does not include all the costs of a loan, so it is very important to know exactly what is and is not included.

What the comparison rate doesn’t include.

  • Government and statutory fees.
  • Lenders Mortgage Insurance or valuation charges.
  • Fee waivers or any discounts that your lender might apply to the loan.
  • Event based charges – redraw fees or early repayment fees.

What the comparison rate does include.

  • The interest rate.
  • Loan approval and any other up-front fees.
  • Any ongoing account keeping fees.