Defence Guide to Home Loan Pre-approval Process

Getting pre-approved for a home loan is one of the smartest moves you can make as an Australian Defence Force member. Whether you're currently serving or are a veteran, understanding the home loan pre-approval process can put you in a strong position when buying a home.

What Is Home Loan Pre-approval?

Home loan pre-approval is when a lender assesses your financial situation and confirms how much they're willing to lend you before you start house hunting. Think of it as getting your financial ducks in a row before you dive into the property market.

During pre-approval, lenders will:

• Review your income and employment status
• Check your credit history
• Calculate your borrowing capacity
• Determine your loan amount based on your loan to value ratio (LVR)
• Assess whether you'll need lenders mortgage insurance (LMI)

Why Defence Members Should Get Pre-approved

As a Defence Force member, you have unique employment circumstances that can actually work in your favour. Military personnel often have stable income streams and may qualify for interest rate discounts that aren't available to civilian borrowers.

Pre-approval gives you:

• A clear budget for your property search
• Confidence when making offers
• Faster settlement times
• Access to home loan options from banks and lenders across Australia
• Understanding of whether you'll pay stamp duty concessions

The Application Process for Defence Members

The home loan application process for Defence personnel follows similar steps to civilian applications, but there are some specific considerations.

You'll need to provide:

1. Income documentation - Pay slips, group certificates, and bank statements
2. Employment verification - Letter from your commanding officer or HR department
3. Asset and liability statements - Details of savings, debts, and any existing home equity
4. Identification - Driver's licence and other ID documents

Understanding Interest Rates and Loan Types

When applying for a home loan, you'll need to choose between different interest rate structures:

Variable Interest Rate: Your home loan interest rate can go up or down based on market conditions. Variable home loan rates often come with features like offset accounts.

Fixed Interest Rate: A fixed interest rate home loan locks in your rate for a set period, usually 1-5 years. This makes calculating home loan repayments more predictable.

Many Defence members opt for a split loan, combining both variable and fixed portions to balance stability with flexibility.

Maximising Your Borrowing Capacity

Several factors influence how much you can borrow:

• Your income and employment stability
• Existing debts and monthly expenses
• The size of your deposit
• Your chosen loan to value ratio (LVR)
• Whether you'll use an offset account

Defence members often have advantages here due to stable employment and potential access to Defence Home Ownership Assistance Scheme benefits.

Making the Most of Your Pre-approval

Once you have your home loan pre-approval, remember it's typically valid for 90 days. Use this time wisely to:

• Research the property market in your target areas
• Understand home loan rates from different lenders
• Consider additional features like offset accounts
• Factor in ongoing costs beyond your mortgage repayments

Pre-approval doesn't lock you into one lender either. You can still shop around for home loan options that offer the most suitable terms for your circumstances.

Streamlined Application Process for Defence Personnel

Many lenders now offer a streamlined application process specifically designed for Defence Force members. This recognises the unique aspects of military employment and can speed up your home loan application.

Specialist Defence mortgage brokers understand these processes and can help you access home loan options that civilian brokers might not be familiar with. They know which lenders offer the most favourable terms for current and former Defence personnel.

Getting pre-approved for your home loan puts you in the driver's seat when it comes to buying a home. You'll know exactly where you stand financially and can make informed decisions about your property purchase.

Call one of our team or book an appointment at a time that works for you to discuss your home loan pre-approval options.