Whether you’re considering a new home loan or in the midst of the application process, we’ve compiled a handy guide to the most common types of documentation and what you need to do with it to fast-track your application and get approval quickly:
Complete application and loan forms
It sounds simple, however by filling out every required section of your application and loan documents with the most up-to-date and accurate information saves you tiresome emails and phone calls that extend the approval process. Always make sure to double check if there any additional signatories needed, like a co-borrower, guarantor or witnesses, and that they complete all required sections before you return the documents.
It’s at this stage of the process, besides getting a competitive deal on your home loan, that having a broker really pays off. As your continued support throughout the application process and life of your loan they act as your liaison with your chosen lender and an aggregate for all your documentation, taking the stress of the application process off your shoulders.
When completing your application you will need to provide 100 points of identification including one photo ID, like a drivers licence. This is a system devised by the Australian government that rates Australian or state-issued identification documents on a points scale. Documents such as birth certificates and passports carry the most value at 70 points, while credit cards and Medicare cards carry the least at 25 points. These documents will most likely need to be verified. You can find a summary of who can do this for you here.
Proof of income
If you are an employee you will be asked to provide at least 3 months of bank statements and/or payslips. If you are self-employed you will be asked to provide your last individual and business tax return, a profit and loss statement and balance sheet. Rental income is also taken into account and for this you should provide a signed lease agreement, bank statements confirming rental credits for the last 3 months and a tax return with rental income included.
The lender may want to see your savings history, which can come in the form of bank statements from your savings account/s.
Your assets and liabilities
The lender will want to know about any existing assets or debts that you have. Assets include things like savings accounts, stocks, investment properties, cars etc. Your liabilities are the financial obligations that you have. They may be credit cards, existing home loans, car loans, regular bills etc. It is worth keeping in mind that lenders will take into account you credit card limit, rather than your current balance. It may be the time to consider reducing your limit or cancelling your card in order to maximise the amount you can borrow for your home loan.
Dependent on your situation and type of home loan you are after, you may need to provide extra documentation. Certain circumstances like being retired, on maternity leave or self-employed will mean you have to provide additional documents.
Statements of existing loans
Whether you are applying for a new home loan or a refinance of an existing loan, you will be required to supply loan statements and balances for loans currently in you name.
Although each lender will vary slightly in their documentation requirements, you can know they will be looking to gather as much detail on your financial situation as possible. Preparing as much of your documentation as you can before you apply means you can minimise your approval time and know you are answering questions on your financial situation correctly.
If you’re looking for a new home loan or to refinance your existing loan, FundingPro can help you compare a range of competing lenders, their rates and deals with one application. Apply now.