Preparing to apply for a home loan is a bit like compiling all the information your accountant needs to prepare your tax. It’s tedious! However, unlike preparing your tax documents you have something very exciting to look forward to – owning your own home.
Knowing exactly what lenders require, and having everything ready to hand over to your mortgage broker, will ensure your application proceeds smoothly and your loan is approved quickly.
With your loan pre-approved, you know exactly what you can afford and will be ready to make your move as soon as you find the right property at the right price.
So, what will your lender want to know?
To put it simply they will want to know who you are, what your income is, what you own, and what you owe (including how you are paying it back).
1. Who You Are – Proof of ID
If you are borrowing as an individual your lender will typically require a combination of a primary ID and two secondary IDs.
A primary ID is a photographic ID, either a current driver’s license or passport. Secondary IDs can be a Medicare card, bank card, utilities bill or tax return with your name and current address on it.
If you are borrowing as a company, IDs for the directors of the company will need to be provided as well as a company registration certificate.
In the case of a trust being involved, you will need a copy of the executed Trust Deed, along with IDs for all trustees
2. Proof of Income
If you are an employee earning a salary you will need to provide either your two most recent payslips or a letter from your employer stating your base income (not including bonuses or overtime). This letter should also state the date you commenced employment with the company as your lender may want to be sure that you have passed any probationary period.
You may also need to provide your most recent PAYG Summary, showing all income you have earned from that employer. If you’ve had multiple employers you will need to provide a PAYG summary for each one.
You also need to provide details of any other sources of income, such as rental income, dividends, interest on savings, child support/maintenance or government benefits.
If you are self-employed or borrowing as a company or trust there are different requirements.
You will need to provide the last two years signed, lodged tax returns for all entities relating to the loan, including any trusts or companies. You will also need to provide the same details for all directors.
Behind with your tax returns? It may still be possible to get a loan but you will need some help from your accountant.
Your lender may accept an accountant’s declaration stating your income on a form provided by the lender, your most recent Business Activity Statement (BAS) or 12 months of business banking statements.
3. Details of Your Assets (What you Own)
Compile a detailed list of all your assets, including savings in the bank, the value of any property you own, your household contents, shareholdings and vehicles such as cars, motorbikes or boats.
4. Details of what you owe and how you are paying it back
List any debts you may have, such as credit cards or personal loans, and the monthly repayments on these. Your lender will not only be looking at what debts you already have but proof of your payment behaviour.
If you are refinancing a home loan with a new lender, the lender will also need to see a mortgage statement covering the last six months of your payments.
Don’t forget to also provide your HECS statement so it’s understood what you owe and any repayments you’ll need to make.
Once you have all these documents compiled and ready at your fingertips, you are good to go!
Contact one of our genius mortgage brokers here at Online Home Loans and they can help you find the right home loan for your particular circumstances. They will double-check that all your documents are in order (and help you if not!), confirm that your eligibility for a home loan is good, advise on the home loan options available to you, and smooth your way through the entire process.
Before you know it, you will have your loan approval and be ready for the exciting journey towards owning your own home.
We are here to help!