On your journey to securing a home loan, it is savvy to look at finance pre-approval options with your mortgage broker as it will help you understand what you can afford. Part of this process is getting a full picture of your financial situation with all of your income, outgoings and liabilities. Here is a simple checklist of documents you may be required to provide your lender.
All lenders require two forms of identification one of which must be a Photo ID, either a Passport or Drivers License. Additionally, you are required to provide one of the following: Centrelink pension card, Medicare Card, Utilities Bill, Rates Notice, Birth certificate and Marriage Certificate or Citizenship certificate.
If you are lending with your current bank and your salary is being deposited into your account, your lender will be able to see your salary record. If you are trying to secure a home loan with another bank – you may be required to provide the last 3 months of statements as well as two of your most recent PAYG summary (Group Certificate) to prove employment. Your bank statements must show your account number, name, institution and full transaction history. If you have recently changed employer within the last few months, your bank may also require your current employment contract.
If you are considered as self-employed, lenders will require a full picture of your personal and business income. Be prepared to provide a 1 year individual tax return and accompanying ATO notice of assessment. If you operate a business bring your 1 year business tax return, profit and loss statement and balance sheet.
If you have other income from investments or foreign income, bring sources of this income along with statements and evidence.
To paint a full picture your lender will want to have a full idea of your current lifestyle expenses. This can include all of your set costs such as utility bills, mobile bills, ongoing rent, healthcare costs. Lenders will also consider your lifestyle costs so provide – car loan payments, credit card statements, subscriptions and if you have any personal loans, you may be required to provide 3 months of loan statements.
Assets and liabilities will help a lender asses your ability to make loan repayments. If you have any – you will be required to provide evidence of your assets such as other properties or substantial holdings.
Liabilities you will need to disclose include other mortgages, your maximum credit card limit, maximum limited for overdraft or personal loan and any educational repayments such as HECs or FEE-HELP.
Maximise Your Chances
Your financial situation will ultimately be the decider in your ability to qualify for a home loan. However here are some things you can do to maximize the chances of your application.
Don’t over apply. Apply only with lenders you are comfortable may approve you. Each time you apply for a home loan the lender will review your credit rating. This impacts your credit file with lenders unable to determine whether you were successful with your other applications, it will be assumed you were denied raising a red flag for the lender.
Obtain your credit file. You are entitled to view your credit report once a year for free. Reviewing your credit report can help you understand how a lender will view you as a potential borrower.
Reduce your debt. If you have large amount of debt from different sources you may want to consider consolidating that debt for a lower interest rate.
Show you can save. It is beneficial to be proactive in demonstrating that you have a good saving record. This can be as simple as providing evidence of regular deposits into a high interest savings account to show your discipline. If you don’t have a strong saving record the best time to start is now.
Be up front. When you sit down with a lender or broker it is best to be honest about your financial situation. If you omit any information which comes to light later you will been seen as dishonest which will damage your chances of approval. Furthermore you may apply for a type of loan that does not suit your situation leading to mortgage stress or defaulting on the loan.
If you would like to find out more information about the home buying process, call us on (08) 8132 1115 to get in touch with one of our land consultants.
Any advice in this blog is of a general nature only and has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on any information. Lanser, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this blog. While it is believed the information is accurate and reliable, this is not guaranteed in any way. See our full disclaimer.