Home Loan

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What is home loan/mortgage?

It can be for personal use or for commercial use

A home mortgage is a loan given by a bank, mortgage company or other financial institution for the purchase of a residence—either a primary residence, a secondary residence, or an investment residence—in contrast to a piece of commercial or industrial property. In Australia, a home loan typically has a 25-year or 30-year loan term, is repaid via regular payments and accrues interest.

In a home mortgage, the owner of the property (the borrower) transfers the title to the lender on the condition that the title will be transferred back to the owner once the final loan payment has been made and other terms of the mortgage have been met.

 

Getting a Home Mortgage

Pre-qualified

Borrowers might seek to be pre-qualified. Getting pre-qualified involves supplying a bank or lender with your overall financial picture, including your debt, income, and assets. The lender reviews everything and gives you an estimate of how much you can expect to borrow. Pre-qualification can be done over the phone or online, and there’s usually no cost involved.

Getting preapproved

Getting preapproved is the next step. You must complete an official mortgage application to be preapproved, and you must supply the lender with all the necessary documentation to perform an extensive check on your financial background and current credit rating. You’ll receive a conditional commitment in writing for an exact loan amount, allowing you to look for a home at or below that price level.

Loan Commitment

After you've found a residence you want, the final step in the process is a loan commitment, which is only issued by a bank when it has approved you as the borrower, as well as the home in question—meaning that the property is appraised at or above the sales price.

When the borrower and the lender have agreed on the terms of the home mortgage, the lender puts a lien on the home as collateral for the loan. This lien gives the lender the right to take possession of the house if the borrower defaults on the repayments.