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Preparing to apply for a home loan

July 9, 2019 10:00 am by Upside

When applying for a home loan, it’s a good idea to be prepared ahead of time to increase your chances of having your application approved. It’s also important to do your research to make sure the home loan you apply for is the right choice for your circumstances.

So, where should you start with choosing a home loan and putting together an application? Take a look at our guide to applying for a home loan.

What documents do you need to apply for a home loan?

There are four main document categories you’ll need to have squared away before applying for a home loan:

  • Personal identification.
  • Income details.
  • Borrower-specific information.
  • List of assets and liabilities.

Here’s a look at each category in more detail:

1. Personal identification

Lenders will require you to verify your identity when making a loan application. Forms of primary identification with some kind of photograph include:

  • Current passport.
  • Driver’s licence.
  • Photo ID such as a Proof of Age Card, Australian tertiary institution ID card, or Waterways/Boat Licence.

If you don’t have any of the above, lenders will usually require at least two forms of secondary identification. This may include:

  • Birth certificate.
  • Medicare card.
  • Credit card.
  • ATM/debit card.
  • Health Care card.
  • Citizenship certificate.

2. Income details

You’ll also need to provide proof of income with your home loan application. The type of proof required will depend on your circumstances.

If you’re an employee, you’ll need to provide the following:

  • A copy of your two most recent payslips.
  • Your most recent Payment Summary (also known as a Group Certificate) from your employer.

If you’re self-employed, you’ll need to provide the following:

  • Personal and business tax returns.
  • Australian Taxation Office (ATO) assessments for the last two years.

If you have a rental income, you will need to provide the following:

  • A formal signed lease (either current or new).
  • Your most recent rental statement.
  • Tax return no older than 18 months.

Depending on the lender and your situation, you may also need proof of any other regular ongoing income, including:

  • Bank accounts that show rental income for any investment properties or rental income statements.
  • Share dividends and interest earned.
  • Family tax benefits statement from Centrelink.

3. Borrower-specific information

Your specific circumstances and reason for borrowing will also determine what information the lender asks for as part of your application. Here are some of the documents you should have handy:

First home buyers

  • Statements showing your savings and investment history.
  • Your most recent bank account and credit card statements.
  • A copy of the Contract of Sale for the property you are buying.
  • Supporting evidence if other funds are contributing towards the deposit, such as a monetary gift from a family member.
  • A statutory declaration for any funds that are being given to you to put towards the purchase, if you don’t already have these funds.

RELATED: First home buyers: The ultimate guide to buying a first home

Owner occupiers

  • Your most recent credit card statements.
  • Account statements for all home loans and personal loans for the last 6 months.
  • Savings and investment history for the last 6 months.
  • A copy of the Contract of Sale for the property you are buying.
  • Supporting evidence if other funds are contributing towards the deposit, such as a monetary gift from a family member.
  • A statutory declaration for any funds that are being given to you to put towards the purchase, if you don’t already have these funds.

Refinancers

  • Account statements for all home loans and personal loans for the last 6 months.
  • Documentation for your existing home loans.
  • The latest Council Rates Notice and home building insurance policy for the property being used as security for the loan.
  • Credit card statements for the last 6 months.

Current investors

  • Rental statements as proof of rental income.
  • The latest Council Rates Notice and landlord insurance or home building insurance policies for the property or properties being used as security for the loan.
  • A copy of the tenancy lease.
  • A copy of the Contract of Sale for the property you are buying.

RELATED: Do you have enough money to invest in property?

4. List of assets and liabilities

  • Examples of assets include:
  • Bank account details with proof of your savings.
  • Current term deposit account.
  • Share investment statements.
  • Superannuation statements.
  • Property or motor vehicle assets.

Examples of liabilities include:

  • Details of any existing loans, such as personal loans, car loans, or other home loans, and credit card statements.
  • It might also be useful to provide a calculation of everyday living expenses such as groceries, utilities, petrol etc.

Checklist to apply for a home loan

Ready to take the plunge and buy a home? Get started with this home loan checklist:

  1. Review your savings and expenses to determine a realistic budget and timeline for buying a property. Remember to factor in costs like stamp duty and conveyancing.
  2. Research the property market to get a feel for typical home prices and what you can expect to get for your money.
  3. Compare home loans to determine which products and lenders are best suited to your circumstances.
  4. Prepare your home loan documentation as outlined above.
  5. Talk to a mortgage broker, who can offer guidance on the right type of home loan for you.
  6. Get pre-approved by a lender, so you have peace of mind when putting in an offer on a property.
  7. Submit your loan application and documents.
  8. Lock in your home loan interest rate.

Whether you’re thinking of buying or selling, see why Upside is one of the top-rated real estate agents in Australia. Check out our property listings, or start your journey with a free property appraisal.

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