Applying for a home loan to buy a property is a straightforward process, provided you have the required documents.
It will save you a lot of time if you take all of the required information to your first appointment with your broker. This way if you decide to apply for a home loan you can get the ball rolling.
The following items are a must.
A lender will need to know who you are before applying for a home loan. This means producing identification and meeting a 100–point ID check. The best forms of ID are a:
- Driver’s license
- Birth certificate
- Medicare Card
- Utility bill
- Citizenship certificate
- Tax assessment.
Female applicants who have married, or remarried after divorce, will also need to supply their initial marriage certificate, divorce documents, and recent marriage certificate.
Why? Well, this gives the lender a trail of potential name changes. It’s also a good idea to make sure that the spelling of your name is the same on every document. Otherwise, you may find that your lender won’t accept the ID as an item of proof.
Proof of income
Most lenders also want to see evidence of income. Depending on your employment situation, there are several ways you can produce this. These are as follows:
- Wage or salary earner – As a wage or salary earner, you’ll need to supply bank statements and pay slips covering a minimum period of 3–months. These must be the most recent statements. Should you not have these, a letter from your employer stating your employment details – type of employment, amount paid and payment frequency – will suffice. This letter must also state the name, address, and contact details of your employer. A company letterhead is usually enough.
- Self–employed – Contractors or business owners need to provide their lender with their last ATO Notice of Assessment, this must be no older than 18–months. Also, you’ll need to supply a recent Business Tax Return, Profit and Loss Statement and Balance Sheet no older than 18–months. Your lender may also ask for a tax portal statement and your accountant’s details.
- Self–funded retiree – Superannuation payment recipients need to present a bank statement showing their income.
- Government income – Centrelink payees, including Family Tax Benefit recipients, must provide a government or bank statement showing earnings.
- Rental property earnings – Investment property owners need to supply a lease agreement or bank statements. Alternatively, a property management letter indicating rental earnings is adequate.
- Investment proceeds – Share and dividend income earners need to provide a shareholder’s certificate or current dividend statement notice.
- Child support – If you have children from another relationship and get child support, this is income. A recent statement from the agency stating the amount you receive is enough evidence of payment.
Evidence of Savings
A recent bank statement that shows the balance of your bank account/s and a historical reference of at least 3–months of savings is a requirement. This document not only shows a potential you’re able to save, but also indicates that you manage your money well.
All lenders want to see proof of what you own. Assets typically include vehicles, shares, property, and land. Plus, if you’re a business owner, then your businesses goodwill and equipment are assets. Of course, you may need to supply supporting documentation to prove that you own these assets.
Lenders want to know what your existing financial commitments are. Therefore, if you have debts, they will want to know what these are as well. Debts typically include credit cards, personal loans, store cards and leases.
Consequently, if your credit card limit is high and maxed–out, consider reducing the limit and paying off the card. Credit card limits, even if paid–off, reduce your borrowing ability. For instance, every $1,000 of limit reduces your borrowing power by $4,000. Thus, if you have an $8,000 limit on your card, this can reduce your borrowing power by $32,000.
An ideal scenario when applying for a home loan is to have no other existing debt. Accordingly, a lender views this as minimal risk, especially if you have a strong credit rating.
Are you ready to meet with a broker? Then contact eChoice and speak to lenders with access to hundreds of products. We have helped many Australians like you secure a mortgage.