Home Financing

Apply to mortgagee/lender for loan approval

You may have to provide evidence of your income.

There are many different kinds of loan products available on the market and you should look around carefully before selecting the loan that is correct for you. Importantly, make sure you can make the repayments with ease, even if the interest rates move up 2% or 3% per annum. Of course, interest rates may increase even more than that! 

Obtain a loan approval

Usually lenders will provide you with a letter setting out the key terms of the loan. Read this document carefully to ensure the loan is what you want.

Credit contract and mortgage

The mortgagee/lender or its lawyer will send you the credit contract and the mortgage.

The credit contract is the legal binding agreement which sets out the terms of the loan. This is usually the only legally binding document which sets out your obligations. You must read it carefully and ensure you understand all of it.

The mortgage document places a charge or encumbrance over your home and allows the mortgagee/lender to take possession of your home and sell it if you default.

Guarantee

Sometimes there will also be a guarantee. A guarantor is someone who is not a borrower who has agreed to ensure all the repayments are made on the due date. Sometimes guarantors provide security (a mortgage over another house or a mortgage

over some other asset). Generally, the mortgagee/lender can recover from the guarantor at the same time as they recover from the borrower.

Signing documents

Some mortgagee/lenders will want you to obtain legal advice or financial advice or both in relation to some or all of the loan documents. You are now at the most important stage of the transaction. If there are any terms which you do not understand or do not reflect what you have agreed to, ask the mortgagee/lender. If still in doubt, ask for a written explanation. If still in doubt, you can contact your government consumer agency or seek independent legal advice, financial advice, or accounting advice.

Whatever you do, do not sign something you do not understand fully. If you have poor English skills, make sure you have the document translated. Most people, even many lawyers, have difficulty in understanding complex loan documents and mortgages. No one will think you are stupid because you ask questions. 

Send documents back

After signing the documents you send them back to the mortgagee/lender or the mortgagee/lender's lawyer (depending who sent them to you).

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