How to get a home loan in time for Christmas

The silly season might be peppered with beach days and family gatherings, but it can also be a surprisingly savvy time of year to buy a home if, of course, you can get approved for a mortgage.

Many Australians hit the pause button on house hunting until January, however those buyers who do stay in the game over the holiday period could discover there’s less competition and more motivated sellers.

While it might be the right moment to make an offer, navigating the home loan process in December requires strategy. With many lenders and solicitor’s offices operating on skeleton staff, a switched-on buyer will be in the best position to move quickly.

Purchasers who plan ahead, get their finances ready, keep their spending in check, and have experts to lean on, can take action while their competition is in holiday mode.

Start early to get ahead

Timing is often the biggest hurdle for house hunters in December. Lender approval windows which usually take just a few days can stretch out into weeks as staff take annual leave and public holidays get in the way of doing business. Even applications started before Christmas can sit on the shelf until January.

Brisbane-based Mortgage Choice broker Laura Nadal says borrowers should plan for up to one month of disruptions around the end of the year.

“From that last week before Christmas, you can pretty much guarantee your solicitor will go away on holiday and won’t come back until some point in January,” she notes. “That whole period is often a complete shutdown.”

Nadal explains that organisation is the key to avoiding added stress at an already stressful time.

“When you’re ready, put an application in straight away,” she says. “At the moment, lenders are still working really hard so they can get approvals done before that Christmas closure.

“Have all your bank statements handy, all your payslips, identification, tax returns, proof of savings and statements from any loans or credit cards. If you haven’t got all your documents in by the first week of December though, you could be looking at pre-approval in January.”

Eliminate debt and get pre-approved

Summer is prime time for overspending, and budgets can quickly blow out, so borrowers should be aware that a flamboyant festive season can raise concerns for lenders and impact borrowing capacity. 

Your debt-to-income ratio is a key factor lenders use to determine your borrowing capacity. It is important to remember that bank and credit card statements from the holiday period will be scrutinised to identify spending patterns, especially over the past three to six-month period. New commitments to ‘buy now, pay later’ services – commonly used around Christmas –  could also act against you.

“If you have a credit card or personal loan, it’s a good idea to get rid of those debts straight away because it may take time for those companies to to send you a closure letter,” Nadal says.

Serious sellers are ready to move

The holiday break can present a unique window for motivated purchasers. Some sellers list because they’re relocating for work in the new year, are moving to start a new school year, or are just eager to wrap up a sale before Christmas. In these instances, your pre-approval status becomes a powerful tool as it shows sellers and agents that you’re ready to buy.

“As long as you’re applying by the first week of December, they’ll likely have time to process the loan application and give you approval by the end of this year,” Nadal says.

For borrowers who already have the green light from their lender, she adds it’s just as important to be aware of the pre-approval time limit as most are only valid for 90 days.

“Don’t worry too much. If your pre-approval times out, then as long as your situation hasn’t changed it likely wouldn’t be too hard to get it extended,” she says. “But just remember, these things do take time.

“To be on the safe side, consider getting it extended before Christmas even if it hasn’t run out yet.”

Lean on experts to navigate the season

Mortgage brokers are in a unique position, given that they can liaise directly with several lenders, escalate issues and negotiate timelines, therefore removing anxiety for overwhelmed buyers.

Brokers can also show borrowers a panel of lenders to find competitive interest rates and practical product features.

“If speed is of the essence, you may have to compromise on certain features in your home loan; like interest rates or fees,” Nadal says. “We have 36 lenders on our books so chances are there’ll be a lender that suits what you need at the time.”

Depending on which lender you go with, they will have differing cut off periods for processing loans.

“It’s crucial that you find out from your broker each bank’s time frame to get approved before the end of December,” Nadal adds.

Clear communication with your broker, solicitor, and the real estate agent will help you navigate the purchasing process successfully during the busy season.

“Speak to your solicitor early on and ask them what you need to be aware of before putting in your offer,” Nadal concludes.

“If you need to, make an offer subject to finance with an extended timeframe, maybe three weeks instead of one. Whatever amount of time they think you will need.”

This article first appeared on Mortgage Choice and has been republished with permission.

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