Applying for a loan is a very big step, and it’s not always straightforward. To help make it simple, here is a handy list of the documents you are likely to need when you meet with your credit adviser.
You are ready to buy a home, you just need a mortgage. Before you go rushing off to meet with your local credit adviser, be sure that you have a few documents on hand to prove your identity, income, assets and liabilities.
You will need two of the following three:
- driver’s licence; and
- photo identification, such as a university identification card or proof of age card.
If you don’t have two of these, you can also provide one, plus a birth certificate, Medicare card, citizenship certificate or similar documentation.
If you are employed on a full-time basis, this is a fairly easy part. You will need to prove your income by providing your most recent PAYG payslip, including YTD income of at least three months. If your payslips don’t list your YTD income, you will need to provide previous payslips, 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.
You will need to prove 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.
By the time you are applying, you should have paid down your debts and reduced the limits on credit cards to give you the best chance of approval and improve your borrowing capacity, as lenders assess your ability to make repayments on your credit limits, not just the amount you owe.
You will need current statements for your credit cards, store cards and loans.
Are you refinancing?
If you are refinancing a loan, you will need the past three months’ loan statements and the current payout figure including any exit fees.
Of course, depending on your personal circumstances and the requirements of your individual lender, the documentation you need will differ. I can tell you exactly what to provide and take the confusion out of applying for a home loan.