How to apply for a home loan

Owning your own home is the great Australian dream, but signing up for a home loan is a long-term financial commitment. That’s why it’s so important to set a budget and compare products to find the best rate, terms and fees.

If you’ve got your deposit ready and aren’t sure what to do next, here’s what you need to know to replace application stress with success.

1. Know how much you can afford

The first step in applying for a home loan is working out how much you can afford. Our borrowing power calculator can help you estimate your monthly repayments, which you can then build into your current household budget to determine how much you’re willing and able to pay.
Remember to leave some room in your budget to cover potential interest rate rises, pay for any account keeping costs or fees, and cover stamp duty on the property, as well as other admin fees like solicitor costs. Budgeting correctly is vital to ensure you keep up repayments on your home loan and don’t risk losing your property.

2. Compare home loan features

Home loan providers typically offer a number of home loan products, all providing a different set of features. Compare them all and remember there’s more to a home loan than just the interest rate.
Consider any account-keeping fees, and take advantage of any deals such as discounted establishment fees, introductory rates or special add-ons. Also take note of the loan terms and conditions and any penalties that may be applied for non-payment.

3. Select the type of loan

Do you want a fixed or variable interest rate? The monthly repayments on a fixed loan are the same for a set period, offering more stability and making it easier to plan your budget. A variable loan swings with market shifts, which may allow you to take advantage of interest rate cuts, but also leaves you vulnerable to rate rises.

4. Get pre-approval


To qualify for pre-approval, you’ll need to supply:

1. Proof of identity including your driver’s licence and passport
2. Full employment history with references from employers
3. Personal details, including your date of birth and address as listed on utility bills
4. Details of any assets, existing debts and expenses with bank statements
5. Recent proof of income such as pay slips
6. Latest Notice of Assessment from the Australian Taxation Office, or if self-employed, three years’ worth of tax returns
7. Bank statements showing evidence of savings
8. If purchasing an investment property, confirmation of rental income for the property
9. Estimation of the purchase price and type of property you are seeking to buy

This is because home loan providers want to be as sure as possible that you can afford to meet your loan repayments. The lender will then use this information to determine your borrowing capacity. To avoid financial strain, it’s important to stick to your budget even if a lender offers you a bigger loan than you were expecting.

Once you’re pre-approved, you can generally make an offer on a home and the loan is confirmed to close the purchase. However, remember that pre-approval doesn’t guarantee you’ll be approved for finance and is subject to a sworn property valuation that the lender will instruct.

5. Finalise your application

After you’ve received pre-approval and are ready to make an offer, you’ll need to have a conveyancer or solicitor review the contract of sale
If you make an offer and it is accepted, the lender will instruct a property valuation. You’ll then need to pay the deposit and finalise mortgage documentation with your solicitor.

Start comparing home loans from all the major Australian lenders now, or use our handy home loan comparison calculator to help you find a great rate.

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