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Formalising the offer

Unless you made a Cash offer for the property you are purchasing, your offer will be subject to finance. You won't be able to secure the property, until the lender you are using approves your offer. We will run you through the progression of a finance application now.

If you were pre approved, it is only a matter of getting in touch with your finance broker and letting them know you've had an offer accepted. You can either give the selling agent your mortgage brokers contact details, or better still contact your finance broker and pass on the selling agents contact details. That way your mortgage broker can contact your agent and arrange for a copy of the accepted offer document (contract of sale) to begin formalizing your finance, they also can contact you and let you know if there are any delays in getting the offer from your agent, that way you can put pressure on your agent to act as well.      

If you haven't already gained a pre approval, you will need to get your finance application underway as soon as possible. There is a checklist of what documents you will require to satisfy most lenders, you can access that by clicking here. Hopefully you have given yourself enough time on your offer and acceptance to gain finance approval, but you will need to get in touch with a mortgage broker or a lender as soon as possible, to talk to one of our finance brokers, click here. Finance Brokers deal with many different lending institutions, so you will more likely than not, have a wider choice of lending products, through a professional licensed mortgage broker.

Once you have contacted your finance broker or lender, you will then need to make an appointment to see them quickly, try to have as much of the information required on the checklist as possible. They will let you know when they will be able to submit the application, or what further paperwork they require from you to submit the loan. From there the deal will be lodged, loaded and assessed. The assessors will hopefully be happy with the file, which generally means they will approve the loan subject to a valuation, Lenders Mortgage Insurance approval or other minor conditions. If there are any major issues with the file, they will most likely defer the decision, subject to clarification of circumstances, or providing further information, they may even decline the deal at that point. If you've used a finance broker, they may be able to fight the decision, if it is made in the negative. This part of the process can take from one day to three weeks in some instances, when everything is running as it should though, you should be able to get this decision in one to three business days.

The next step is hopefully only to wait for the valuation to take place, possibly also for you to provide further information to the lender. The valuation process takes normally between 3 to 5 working days to complete. Things that can delay a valuation are; not having the correct access details, the property being regionally or rurally located (most rural areas are only visited once a week by valuers) or a tenant or owner that is difficult to contact. Most valuations are conducted during business hours, it may take longer to arrange a convenient time outside of business hours, if the occupant of the property you are purchasing, can't make time to let the valuer through. Once the inspection has been carried out, the valuation report normally makes its way back to the bank before close of business the following day. This then flags the file for follow up with the lending assessor, they will, if all other conditions are satisfied, forward the file to the mortgage insurer for approval.

Hopefully the mortgage insurer has no issues with the file, and can give you the answer you are looking for. The worst thing about having to use a Mortgage Insurer is they have the final say, they also have their own criteria you need to meet, if it is within their guidelines you are normally fairly safe. Once the mortgage insurer makes a decision though, it is in most cases final, there is never much room to negotiate with the mortgage insurer. Normally the only way you can get them to change their mind is by dramatically reducing their risk, this normally involves assistance from a third party, such as a parent or sibling etc to help with a guarantee or gift.

The 7 steps to buying your first home