The short answer is: approximately a week.
We sometimes receive answers from the banks within a day, and sometimes it takes 3 days. In some cases, where additional information is required or it is an exceptionally complicated application it can take longer than a week, but that is very rare.
Most Offer to Purchase/Deed of Sale contracts make provision for a period between 14 & 21 workdays to obtain bond approval and this is more than sufficient time, normally, but it all depends on how soon the applicants (buyers) provide the necessary documents as requested by the bond originator. Here it is vital that the person you are dealing with knows the various banks’ criteria and requirements to be able to request the correct documents from you. We apply to most, if not all, of the major banks with each application, and they all have different document requirements. We have to be thorough with our document lists, so our application form and supporting document lists combine all of the banks’ requirements. This means we ask for more than some people think should be necessary, but in my experience a complete application is one that runs through the banks’ systems and processes smoothly.
We need to distinguish between an Approval In Principle (AIP) or as some banks now call it ‘Conditional Grant’ and a FULL or final approval, which is mostly referred to as a Quotation or granted Quotation. An AIP is issued when the bank has completed their credit checks and affordability assessments, after confirming that all the minimum basic document requirements for the specific application type has been fulfilled. A template will then be sent saying the bank is willing to offer a loan amount of ‘X’ and will sometimes indicate the expected interest rate, subject to a successful property valuation. Once the valuation (physical visit to the property or desktop valuation where they use recent system information) has been completed, they will issue the Final approval / Quotation with more detail regarding interest rate, monthly repayments, loan term, interest, insurance, etc. This Quotation is then accepted by the buyers and the attorneys can start with their processes of Transfer and Bond registration.
The reason for submitting your bond application to various banks, and not just your own bank, is to have comparable offers from other banks and make provision for a possible negative answer from your own bank. It happens more often than you might think that another bank makes a better offer than your own bank where you have a relationship and have possibly been a client for many years. It sometimes happens that your own bank declines your home loan application or makes a lower offer, but it is approved by another bank, due to their scoring models or appetite for the specific risk (or lack thereof) that your application brings.
We are not in the business of ‘routing’ clients to a specific bank other than their own and we will always give the client’s bank the opportunity to match or possibly better another bank’s offer, to retain the business. Sometimes this is not possible and in such cases the client has the option of another bank for their home loan. This is why a home loan account is so important to the banks as most people like to have their different accounts (cheque, vehicle finance, credit card, home loan, etc) with the same bank for ease of everyday banking.
So it seems I’m singing the same old tune once again… choose your bond originator carefully as this person could be the difference between receiving great feedback within a few days vs less than expected offers over a drawn out process of going back and forth between you and the banks.
Remember, you can only submit a bond application to a bank through one channel. In other words, you cannot approach the bank directly and ask a bond originator to submit your application to the same bank. The choice is an important one which will affect you for many years to come, so choose wisely.
Yours in Home Loans…