So you plan on purchasing a property. Congratulations! It's now time to work on your home loan application. When preparing to apply for a home loan, a bank or a mortgage lender will request several documents to evaluate your eligibility for a mortgage and determine the amount you can borrow
Borrowers need pay slips, bank statements, identification documents, and evidence of their debts and assets. To ensure a smooth home loan application process, it’s best to have a document checklist to have the necessary documents on hand when the lender asks for them.
Here’s a checklist of the documents you need to prepare for your home loan application:
1. Proof of Identity
Lender must obtain a valid ID to confirm your identity for a home loan application. This could include your passport, birth certificate, driver’s license, citizenship certificate, proof of age card and Medicare card.
2. Proof of Income and Employment
If you are an employee, you must provide two of your most recent payslips, including your gross and net income. Any regular overtime or allowances, and the length of your employment. If you are still on probation, you may need a letter from your employer confirming your employment status.
If you are self-employed, you will need to provide your income tax returns from the last two financial years, along with your most recent Assessment Notice. Some lenders may also require a registered accountant’s certified profit and loss statements.
If you are purchasing an investment property, you must provide either a copy of the lease agreement with your current tenant or a letter from your property manager confirming the estimated rental income.
3. Expense Breakdown and Proof of Savings
Where does your money go each month? Your lender will want to know your monthly expenses, from housing to groceries to entertainment. Reviewing your bank statements can help you get a clear picture of your spending habits.
You can also present details of extraordinary expenses like private school fees or child support payments.
4. Asset Records
These could include shareholding or other investment statements and market estimates for property or vehicles in your name. Bank statements showing the savings history, typically over the past three months from the application date, will be required as proof of assets.
Details of assets, including superannuation and any shares held, should also be declared. If you own other investment properties, you will need to provide copies of the rates notices for each property.
5. Proof of Liabilities
If you currently have a mortgage, you will need to provide at least three months’ worth of loan statements. In addition, you will need to provide the most recent statements for any car or personal loans and any credit cards or store cards you may have.
The home loan application process can be pretty lengthy and comes with its complexities. Getting your ducks in a row before you apply can help the lender better assess your ability to service the loan.
Taking the time to finish getting your paperwork before applying can speed up the process and make the home loan journey more seamless for you. Remember to also check with your lender for their specific application requirements.
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