One of the first questions we often get is “how do we go about applying for a home loan?” And my general response is always well you have come to the right place.
By using a broker (instead of going direct to a bank, that might our next topic of discussion) you can receive expert guidance on the right initial steps in getting your paperwork ready. By having everything lined up it can put you in a powerful position to know exactly where you stand.
In short you will need start with 3 main things as broken down below.
1. Identity– this is how the lenders verify who you are.
You will generally need to supply the following:
· driver’s licence; and
· Medicare card
· citizenship certificate/visas (if relevant)
· birth certificate and marriage certificate in some cases
If you are employed on a full-time basis, this is a fairly easy part. You will need to prove your in come by providing your most recent PAYG pay slip, including YTD income of at least three months. If your pay slips don’t list your YTD income, you will need to provide previous pay slips, your employment contract, an ATO tax assessment, a PAYG summary or a professionally prepared tax return.
If you are self-employed, you’ll need to provide your individual tax return and ATO assessment notices for a year, as well as your business’s financial documents: one year’s tax return, profit and loss statement, and balance sheet. You may need BAS statements or other documents from your accountant, too.
Whether you are self-employed or not, any other income you receive will also need to be documented. For example, if you own an investment property, provide a current lease, tax return listing the rental income or a letter from the leasing agent; if you own shares, bring a statement, investment record or tax return; and if you receive any government benefits, bring a statement from Centrelink.
3. Assets and Liabilities
This helps to complete the picture in regards to your deposit and spending habits. You will need to provide evidence of your savings with bank statements, as well as be able to provide details and values of any other assets, such as cars, stock, term deposits and property.
For liabilities it is essential to provide information on any debts that you have. This means credit cards, personal loans, car loans, student or trade debts as well as any shopping facilities such as afterpay or furniture purchase facilities. We need most recent statements for all these too.
All of the information above provides the basis for reviewing your borrowing capacity and assessing your eligibility with each lender as they all view things slightly different. (for example over time is treated very differently depending on both your industry as well as the lender of choice)
Of course, depending on your personal circumstances and the requirements of your individual lender, the documentation you need will differ. Luckily, we are here to tell you exactly what to provide and take the confusion out of applying for a home loan.