The Loan Approval

The Loan Approval

Congratulations, the home loan for your dream home has been approved. Shortly after you receive verbal confirmation of the loan approval you will receive an approval letter and the loan contract. Unfortunately at this stage there is still a couple of steps that need to be completed before we can move on to the settlement and moving into your new home.

  1. The letter of offer from the lender – you will receive a formal loan offer letter once the lender has approved the loan. This is an important legal document which sets out the conditions that apply to your loan, including the interest rate and term of the loan. You must read this document carefully and ensure that you understand and agree with the contents. If there is anything you do not understand or agree with, you should seek professional advice immediately.
  2. Lenders loan terms and conditions – attached to the letter of offer the lender will provide you with detailed loan terms and conditions. This is another important legal document as it sets out the obligations for you and the lender. Again you must read this document carefully and seek professional advice if you are unclear about any of the terms and conditions.
  3. Accepting the loan offer – If you are happy to proceed with the loan, you should arrange to sign and return the loan documents. Remember this is a legaly binding document, please ensure that you seek professional advice for anything you don’t understand before you sign any document.
  4. Once you have returned the signed documentation to the lender they will commence arranging for the mortgage to be taken over your property
      • The mortgage is a legal mechanism which provides the lender with rights over your property (security) in the eventuality that you fail to meet your obiligations under the loan contract.
      • Particularly is you fail to meet your loan repayments, the lend has an exhaustive process which they follow to ensure the repayment of the loan balance. Which includes as a last resort, the lender can selling your property to meet the loan obligation.
      • The lender will liaise with your solicitor or conveyancer while arranging the mortgage.
      • The process will typically include title searches to ensure that you are or will become the rightful owner of the property.

Once they steps have been completed we can move onto settlement of the property purchase and the big day of moving into your new home. The key points to remember at this stage of the process are:

    • Read and review all the loan documents carefully
    • If there is anything you do not understand consider getting independent legal advice
    • Sign all the loan documents where indicated
    • return them as soon as possible

Next time we will look at the final step in the process – Settlement.

Credit History

Credit History

Your credit history will include your:

  • full name;
  • date of birth;
  • driver’s licence;
  • gender;
  • residential addresses; and
  • employment information.

The credit information which may be recorded on your credit history will include:

  • credit applications made in the past five years relating to
      • Credit cards;
      • Personal loans;
      • Store credit; and
      • loans for the purchase, renovation or re-financing of a residential property;
  • details of overdue consumer credit accounts; and
  • serious credit infringements

Since March 2014 your credit history may also include “positive” information, including:

  • Type of credit account;
  • Account open date and close dates;
  • Credit limit; and
  • Monthly repayment history.

The following public available information may also be captured on your credit file:

  • court judgements and court writs;
  • directorship details;
  • proprietorship details; and
  • bankruptcy, debt agreement and personal insolvency information.

It’s a good idea to obtain a copy of your report from time to time so that you are aware of the information has been recorded against your credit history. You can request for an amendment to your credit history if you believe that any of the information is incorrect.

You can obtain a free copy of your credit history in the following circumstances:

  • You can request a copy where a credit application was declined. You must apply within 90 days of the date you were declined;
  • You can request a copy if you have lodged a correction request and been advised that information on your file has been corrected; and
  • You can request a copy once every 12 months.

It’s a good idea to check your credit history every year. As well as affecting your ability to get credit, incorrect listings can alert you to things like identity theft. When you do get a copy of your credit history, some possible problems/errors to check for are:

  • Your name or date of birth might be incorrect;
  • Your address may need updating;
  • A debt might be listed twice or the amount might be wrong;
  • You may have missed one repayment on your loan but were never 60 days in default; and
  • Someone might have stolen your identity to get credit.

If you don’t agree with what’s in your credit history, you can request to have it changed. Incorrect listings should be changed for free. However, a credit history cannot be changed unless a listing is shown to be inaccurate or out of date.

Follow these steps to change an incorrect listing

  • Talk with the credit reporting agency first. They may be able to fix small errors straight away. For others, they will help you through the steps needed to make a change. They may offer to contact credit providers for you.
  • Talk with your credit provider. Contact your credit provider and explain why the listing is misleading or incorrect. If they don’t fix the problem, go directly to your credit provider’s independent dispute resolution scheme.
  • Listing still incorrect? Contact the Privacy Commissioner. If you still haven’t been able to sort out the problem after going to your provider’s dispute resolution scheme, contact the Office of the Privacy Commissioner (go to privacy.gov.au).

You can get a copy of your credit history from these agencies:

Veda Advantage – veda.com.au – 1300 762 207

Dun and Bradstreet – dnbcreditreport.com.au – 13 23 33

Tasmanian Collection Service – tascol.com.au – (03) 6213 5555

Experian – experian.com.au – 1300 783 684

If you are looking to apply for any credit, from a credit card to a home loan, your credit history is an important consideration that the lender will take into account in deciding to approve your application. It is important that you regularly check your credit history to ensure it is accurate, if you have not checked your credit history in the last year do so now.