How Long Does Home Loan Approval Take During COVID-19?

The usual time of about 4-6 weeks it took for your home loan application to complete settlement is no longer valid!

Due to the lockdown and the social distancing measures because of COVID-19, turnaround times for getting your home loan application assessed are longer than usual, and lenders are constantly moving the goal post.

How long will it take for my home loan to get approved?

Some lenders are super slow but many are still fast.

Only recently, one of our mortgage brokers got a customer to settlement within 2 weeks!

The key is to apply with the right lender.

Lender turnaround time varies between lenders quite significantly based on their remote working capabilities.

A lot of major lenders are taking as much as 25-30 days just to look at your application (pre-approval), whereas, some have a quicker turnaround time of 2-4 business days.

In fact, a lot of lenders are no longer offering full assessment on pre-approvals; however exceptions can be negotiated by your mortgage broker with the lenders.

Incredibly, lenders currently running behind their normal turnaround time are prioritising purchases over refinances.

Why is it taking so long?

The reasons for delays:

• Lenders are processing many applications for repayment holidays. By May 2020, banks had approved as many as 429,000 mortgages.
• Their offices are closed and they were not set up to work from home.
• Many with processing in Manila have been unable to process loans at all due to strict lockdowns.

Many lenders have offshore call centres/processing in Manila (Philippines) or India.

There has been significant disruption there, and many lenders were not set up to work from home. So their processing time has blown out. Others are completely unaffected.

Many lenders were simply not well-positioned for doing business online and are having to adjust to working from home or remotely.

This is quickly changing as lender processes are being updated to adapt to this post-COVID-19 environment. As is usual with big banks, the process will take time!

Tips for a fast home loan approval amidst COVID-19

Get your documents in order

Around 80% of home loan approval delays are the result of missing documents!

• For PAYG borrowers – the latest payslip no older than 14 days (this is to confirm your employment and that your income hasn’t been impacted by Covid-19)
• For self-employed – March quarter BAS statements and business account statements (this is to confirm your business remains trading and no reduction in income)

The income verification document requirements vary by employment type and lender, so please get in touch with us before submitting your application.

COVID-19 tips for home loan approval

• Due to coronavirus, lenders are taking longer than usual and there are frequent changes by the lender. Providing all the required documents on time will be effective.
• Since lenders are prioritising purchases, if you have a property in mind get a blank copy of the contract of sale from the real estate to show the property address.
• Apply through a mortgage broker that enjoys priority service with the banks.
• Contact your HR. Call them up and let them know that the bank will call to verify your employment. Lenders will also most likely ask for an employment letter – this is a new requirement of lenders arising due to COVID-19.
• Stay in contact with your mortgage broker throughout the process. Since lenders are constantly adjusting their lending policies and processes – flying by the seat of their pants as one of our brokers put it – so even minor issues can delay your application significantly. Being in regular touch with your mortgage broker about the status of your application is recommended so that they can be dealt with as they arise.
• Applying with a lender that has an Esign facility will speed up the process.

As mortgage brokers, we always have the exception raising process with the business development managers at the bank, so that is helpful in urgent times.

Please speak with one of our specialist mortgage brokers, who can get you the best deal based on your situation. Call us on 1300 889 743 or fill in our short assessment form, so we can get started asap!

What changes are lenders making?

Due to the lockdown and social distancing measures in place, face to face meetings for verifying customer identification or a physical valuation is not always feasible.

Interestingly, we’re seeing that almost every lender has introduced non face-to-face ID process lenders. Some have also tweaked their property valuation process relying more on desktop valuations and kerbside valuations.

Customer identification (ID) process

More lenders have updated their ID process to include online verification or non face-to-face interviews:

• Video interviews conducted virtually on digital platforms such as Skype / Facetime/ Zoom etc.
• Courier services through Australia Post or ZIP ID which can verify your identity without you needing to see someone in person.
• Sending your certified copies of ID.

Remember, to do an electronic verification of identity; you’ll need at least two primary IDs such as your passport, driver’s license/permit or a proof of age issued by a state or territory etc.

From physical valuation to kerbside or desktop valuation

A physical inspection of a property requires the inspector to schedule a time to inspect, visit the property, and compile his report – this takes time.

A *desktop, AVM (Automated Valuation Model) or kerbside valuation is significantly faster and cheaper (free with some of our lenders).

Traditionally, desktop or kerbside valuations were only used for properties in prime locations and for less risky loans, i.e. loans for less than 80% of the property value.

Now, some of our lenders are accepting a kerbside valuation for loans up to 90% of the property value (95% on a case by case basis). They’re using it in conjunction with an automated computer valuation for an accurate valuation.

Luckily, a few lenders are still doing a free upfront valuation that we can order for you.

Please note that in cases where the loan doesn’t go through some lenders are charging a valuation fee.

*There is a slight difference between a desktop and automated valuation. The main difference is that with an automated valuation, it is done entirely by a computer. In contrast, with a desktop valuation, a valuer will value the property from his desktop looking at historical data.

Timeline of the home loan process amidst COVID-19

We estimate that a standard home loan application will take around 4-7 weeks from initial discussion, assessment through to completion of settlement.

By being organised with your mortgage application documents and choosing the right lender, a quicker home loan approval is possible!

Did you know you can fast track your application?

Most people outside of mortgage brokers don’t know this, but banks assign priority service for applications submitted by top brokers. By top brokers, they mean brokers who’ve submitted quality deals that go through over the past 12 months or on a regular basis.

As such, the applications submitted by these top brokers are moved to the front of the line.
For example, one of our major lenders has a system of categorising brokers into Gold, Flame, or Accredited.

Current SLA: Gold- 4-5 days/ Flame- 2days /Accredited- 20 days

What this means is that an application submitted by a “Gold” broker gets assessed within 4-5 business days. In contrast, a submission through an accredited broker will take 20 days.

If you want an application fast-tracked, it pays to go through a priority service mortgage broker.

Many of our brokers enjoy priority service enjoy priority services with banks.

Get your application fast-tracked by talking with one of our mortgage brokers by giving us a call on 1300 889 743 or by filling in our online assessment form.

How long does it take to refinance a home?

Typically, it would take you anywhere between 4- 6 weeks to refinance your home loan. But for a lot of people, it could take up to 6-8 weeks.

However, there are ways of fast-tracking your refinance application.

Prime among them is a fast refinance service provided by some banks. Each bank calls it by a different name – FAST refi, Priority Refinance (XRO) – but they all serve the same purpose.

The purpose is that once documents have been received and certified, you can have your refinance approved in as little as two days.

This means your loan would take three weeks from the time you apply to when it is advanced.

It cuts down the time to refinance by over two weeks with less paperwork.

Moreover, your new bank will contact your existing lender to organise it and do most of the work for you.

We’ll tell you exactly how long it will take to get approved!

Since everyone’s situation is different, your best bet is to work with award-winning mortgage brokers well adapted to working remotely and quickly, especially in this environment.

Speak with one of our specialist mortgage brokers today, and you’ll be one step closer to getting approved.

Call us on 1300 889 743 or fill in our short assessment form to get started.