What documents do you need to apply for a home loan?
Whether you’re looking to buy your first home, upgrading to a larger home, investing or even refinancing, your going to need a significant amount of documentation to keep those pesky lenders happy.
Here’s a handy list of the some of the standard documentation you will need to have before you apply. Documentation requirements may vary from lender to lender,but this will be a great start.
100 Point Identity Check
Your lender is legally obliged to perform a 100 point identity check, which will require you to produce two of the following identification items which have photo identification:
- A current passport
- Your driver’s licence or other photo identification like a university identification card or a proof of age card
- Your birth certificate.
If you do not have two of these documents, you could produce one of them plus other documentation that proves your identity instead, such as:
- Medicare Card
- Rates notice or other bill sent to your current address
- Citizenship Certificate
Proof of Income
This step often sounds much more complicated than it actually is.
If you have a full time job, proving your income is as easy as providing your most recent PAYG payslip, as long as it includes your year to date income for at least three months. If your payslip doesn’t provide this information, simply collect three consecutive previous payslips, or your employment contract, an ATO tax assessment, a PAYG summary from your company paymaster, or a professionally prepared tax return.
If you’re self-employed or running your own business, simply provide your individual tax return and ATO assessment notices and your basic business financial documents. These would include at least one year’s tax return for the business (lenders sometimes ask for two year’s assessments, but this will vary from lender to lender), BAS statements, your profit and loss statement and balance sheet.
Any other documentation that proves your business income could be useful, so ask your accountant if there’s any further documentation they can provide. If you have other sources of income besides your job or business, you should provide evidence of these too. For example:
- If you own an investment property, provide the current lease, a tax return listing the rental income or a letter from your property manager or leasing agent.
- If you own shares, you can also provide a statement, investment record or a tax return that details the income.
Proof of Assets
Your lender will require some proof that you’ve got your deposit in order and are in a good position to service your new loan. You can provide this evidence simply by producing your bank statements.
Additionally, if you have other assets, it will help to provide details and values of these too. Make a list of your other assets including:
- Your car
- Stocks and shares
- Savings accounts, term deposits
- Property investments and provide whatever documentation you can to determine their current values.
An Accurate Assessment of any Debts and ongoing Expenses
Lenders assess your creditworthiness on the amount of money you already owe, your ability to repay your debts and your capacity to take on more debt. Paying down any credit card debts or personal loans prior to applying for your mortgage will improve your borrowing capacity and give you the best chance of loan approval when you apply.
To help the lender make a fair assessment, you should provide evidence of your weekly outgoings and expenses. You should also provide recent statements for:
- Credit cards
- Store cards
- Personal loans
- Car loans
- Any other debts that you may have
What is you’re Refinancing an Existing Loan?
In addition to the above documentation if you are refinancing an existing loan you will need to provide documentation relating to that loan. For example, you will need to provide the last three month’s loan statements plus provide the current payout figure for your loan and document any exit fees.