Mortgages

Easy to understand guide to applying for a home loan online

Nathan Gooley
May 31, 2021
Yard Financial Pty Ltd | ACN 623 357 513 | Australian Credit Licence 509481

Table of Contents

Need to understand how to apply for a home loan online?

A home loan or mortgage is the process of borrowing money from a bank or lender to finance the purchase of a property. Thanks to advances in tech and the digital economy you can now apply for a home loan online, without leaving home or seeing a lender in person. Lenders now have the required tools to receive and approve your application online and do things like accept documents and run digital identity verification checks remotely. 

Read our handy Q&A explainer guide to help you understand everything you need to know about applying for an online home loan, including the application process, eligibility requirements for getting approval and all the documents you need to gather to submit. 

If you are new to all this you should read our dedicated first home buyers guide, which has all the must-know information to help you make the leap into home ownership.

Why apply for a home loan online?

Wondering why you shouldn’t head down to your local bank branch to apply for a home loan?

The fact is the market has evolved and today online lenders - like Yard - are able to offer some of the lowest rates in the market. This could mean savings of thousands, and even more, over the life of your loan. 

An online application also means you can complete the process at your leisure -  in as little as 15 minutes. You also have the option to chat with a lender via email or over the phone to design your loan, or if you have further questions. Online applications also mean you can upload all the documentation required by your lender quickly and easily via their application portal. 

Ready to apply? It’s as easy as clicking the green ‘Apply Now’ button where you’ll be guided through the home loan application process. Our friendly local team are also available to chat at a time that suits you.

Can I get instant approval for an online home loan?

You can get instant approval - or indicative approval - from some lenders for an online home loan. These are often system generated, come with many conditions and rely on how thorough you have been with your application. 

This is different to full assessment pre-approval, where the lender reviews all your documents, conducts a credit check and comes back to you to request further documents or to clarify your submission. This type of pre-approval is more thorough - so typically takes a few days to be processed, but is likely to have less conditions attached. 

Now let’s look at the application process so you know what to expect at every step.

How does the home loan application process work?

The home loan application process begins with our easy online home loan application, which starts an 8 step process.

  1. Talk to a dedicated Loan Consultant (real human) to discuss your home ownership objectives and help you work out the best solution.
  2. We then verify your information by receiving some supporting documentation, e.g. payslips, bank statements or tax returns.
  3. Receive pre-approval to give you confidence in your borrowing capacity so that you can attend an auction or place an offer on a property.
  4. Buy your dream home or investment property - you are ready to purchase a property. Go for it!
  5. Now that your offer on a property is accepted, you send us the contract of sale and we engage an independent property valuer to perform a valuation.
  6. The credit team reviews the valuation report and makes a final assessment on your application.
  7. Our solicitors send you the loan contract via email to read, sign and return.
  8. Now it is time for settlement, when our solicitors work with your conveyancer to settle the property.

You're a property owner! Congratulations!

How do I qualify for a home loan?

Home loan providers take a number of factors into account before they approve your home loan. 

They need to work out if you can afford to pay - or service, your monthly home loan repayments. Your serviceability is based on your monthly expenses/outgoings/debts which is subtracted from all your monthly income. 

To qualify for a home loan you also need to have the required deposit, meet the LVR (loan to value ratio) threshold and be able to service the loan. Your LVR is calculated by dividing the amount of your home loan by the purchase price or appraised value of the property. 

Yard can provide loans for up to 80% of a property’s value without Lenders Mortgage Insurance. For example, if a property has a value of $1 million, we may lend you up to $800,000. Yard can lend up to 95% of the property’s value with Lenders Mortgage Insurance.

Now let’s cover all the documents you need to submit with your application.

What documents do I need to provide to my lender?

To assess your online home loan application a lender will need to see documents confirming your identity, income, debts and what assets you own. 

To make the application process as quick and straightforward as possible, and to avoid any delays in getting approval, have the following ready to submit to your lender. 

If you are employed (PAYG) you should prepare the following documents for submission:

  • Two recent consecutive payslips (for each applicant)
  • Income statement or PAYG summary (copy of actual Group Certificate)
  • Bank statements for the last 3 months (with salary credits and debits)
  • 3 months of most recent statements for any other home loans and lines of credit
  • Recent council rates notice (refinance only)
  • Certified copy of driver license and passport

If you are self-employed you can apply for a home loan online, but you will have to provide additional documentation. This includes 2 consecutive years of your latest:

  • Personal tax returns (all full pages)
  • Tax assessments
  • Company tax returns (and financials if applicable)
  • Profit and loss statements
  • Trust tax returns (if applicable)

Depending on your personal financial circumstances a lender could also ask to see additional documents, including your latest Family Assistance or other Centrelink statement, your current rental agreements and others. 

Now let’s run through our checklist of things you need to have done before applying for a home loan online.

Home loan checklist: What you need before you start the online application 

Like anything in life it is good to have all your ducks in a row before you start the application process. Tick these off and your application is more likely to progress smoothly and not be delayed:  

  • Research and compare interest rates
  • Research and compare lenders offers, including the different types of loans they offer
  • Estimate how much you need to borrow based on the area and type of property you are looking to purchase
  • Check whether you can afford the loan, based on your income and outgoings
  • Confirm you have sufficient savings and a solid track-record of saving
  • Confirm you have a sound credit history

You may also be wondering how to improve your eligibility in the eyes of a lender.

How can I improve my eligibility for an online home loan?

Want to guarantee you get approved for your online home loan? Pay attention to these details to ensure you meet all their eligibility criteria by:

  • Having the required deposit
  • Maintaining a clean credit score
  • Having a stable job, preferably for a minimum of six months or longer
  • Providing all the required documentation
  • Respond to any communications from your lender promptly
  • Be honest about your personal and financial circumstances when applying

Not sure how much you can borrow?

How much can I borrow for a home loan?

You can estimate your borrowing capacity with our handy online calculator

It will help you estimate your home loan borrowing capacity, the value of the home you can afford (assuming you are buying with a 20% deposit) and your monthly repayment. Key information you will need to input includes:

  • How many borrowers there are?
  • How many dependents you have?
  • Your net income
  • Your monthly expenses (including credit card limit and other loan repayments)
  • The term, or length, of the loan
  • How frequently you will be making repayments (monthly, fortnightly or weekly)

Why apply for a Yard home loan online?

Wondering why you should consider us for your home loan? It is a fair question, given the investment and financial commitment involved. Here is why we think we stand out:

  • Our application process is hassle-free, online and free
  • You get a dedicated loan consultant who works with you from start of application through to settlement
  • We can provide a pre-approval that’s valid for 90 days, which gives you confidence to go to bid at an auction

Other features of our online home loans include unlimited additional repayments and free redraws as well as an optional 100% offset facility

Armed with this knowledge you should now be in a better position to apply for a home loan online, the first step to becoming a property owner.

Have any questions about our home loans? We’re here to help, and our friendly local team are available to chat at a time that suits your schedule.

Want to learn more?