Applying for a home loan can be a daunting process because you’re usually entering into one of the biggest transactions of your life, and the bank’s can be faceless corporations dancing to the beat of their own drum. Yes, they want to lend money, but only on their terms.
Terms which they kind of keep secret to the borrower. So to make this process a little less stressful it pays to be prepared and be organised.
So whether you’re going for approval in principle or the whole hog and have a signed purchase contract in your hot little hand, here’s what you’re going to need (at the minimum).
Your broker or lender will give you the exact info required by the lender you’re going with, but if you delivered the info listed below up on day 0, you’ll be everyone’s best friend and this will hurt a whole lot less.
If you’re employed (by a 3rd party, not by your own company), you’ll need;
- The 3 most recent payslips.
- Last Financial Years Notice Of Assessment from the ATO
- Evidence you’ve saved your deposit – like bank statements
- Evidence you have the “funds to complete” the purchase.
Usually you’ll need to be in your current job for at least 6 months – but not always. If you’re casual or changed industries it can be as long as 12 months so keep that in mind before you go switching careers.
If you’re self employed (either as a sole trader or through a company, trust or partnership), and not going low doc you’ll need;
- Last 2 financial years of accountant prepared financial statements for the business
- Last 2 tax returns for the business
- Last 2 years tax returns for you personally
- Last 2 years notices of assessment for you personally
Depending on the lender and how the business has performed over that time you may also need;
- Integrated client account & Income Tax Accounts (from the ATO) for the business showing you have no ATO debt or outstanding lodgements
- Copies of Business Activity Statements
What if you’ve been in business less than 2 years?
Then you’ll be going down the loc doc route.
If you are going low doc, you’ll won’t need the financials or tax returns, but you’ll need things like BAS, business bank statements and accountant’s letters.
If you’re relying on rental income you’ll need to include a recent statement from your agent showing the rent received and potentially a copy of the lease.
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Identification
All applicants will need 100 points of ID (usually driver’s license, passport, Medicare, ATM card or a combination of these is sufficient) This needs to be verified by the mortgage broker. Depending on the lender this may need to be in person, or it can be done via an video app.
If you have a trust in your group structure, then you’ll need to provide a copy of the deed.
Your broker will ask you for your living expenses.
This is usually done via a questionnaire to do the preliminary analysis, then you’ll need to provide your bank and credit statements, so that the broker and lender can verify that your expenses are as you say they are.
Yeah this is a little invasive and honestly from the broker side I don’t particularly like knowing how many times you call Jimmy Brings in a month, but it’s all part of the responsible lending legislation.
The bank and credit card statements can be provided electronically to the broker through a data retrieval software like cash deck or bankstatements.com.au. Each broker will have their own system, and they’ll let you know.
Assets & Liabilities
This will also form part of the questionnaire the broker or lender will go through with you. Here they are trying to get an understanding of you and your position. After all if this loan goes pear shaped and the lender needs to chase you for the shortfall between the property sale proceeds and the mortgage owing, they’re going for your personal assets. So they want to know what’s there to go after.
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If you earn $300,000 and have no assets, but do have credit card debt and outstanding tax returns, you’re going to be viewed differently to someone who earns $300,000, has $1mil equity in a property, a share portfolio of $500k, no outstanding tax returns and pays off their credit card in full each month.
The upside of this is you’ll know how much you’re worth.
Hot tip: liabilities include HELP/HECS debts, credit cards, personal loans, and buy now pay later facilities.
If this isn’t an approval in principle and you’re going in boots and all, you’ll need a fully signed copy of the purchase contract
You’ll also need to answer some questions about your attitude to interest rates, what sort of loan features you want or don’t want, your exit strategy if the loan term is longer than your retirement horizon etc.
Again each broker will have slightly different questions, but it’s all designed to find out your needs and wants so they can find a loan that is “not unsuitable”.
Looking for a property, want to do a reno or refinance? Let us do the numbers. We’re good at those. Hit us up here.