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Paperwork is a necessary evil when taking out a home loan, but it can be overwhelming for the uninitiated.
John Tindall, a Choice Home Loans mortgage broker in Wattle Grove, Sydney, says while no one realistically expects to borrow $500,000 from someone without filling in some forms, it can be overwhelming.
Loan forms can take a bit of time to complete. Picture: realestate.com.au
“There are certainly times clients seem to resent having to do home loan paperwork, but if you’re prepared, you’ll get the money for your property faster and with less hassle,” he says.
“The best tip is … like any homework; take your time, be thorough, be accurate and check your work!” Tindall says.
Tindall explains the basics of what must be provided to a lender. It starts with providing biographical information such as marital status, number of children, monthly living expenses etc, to build up a fact file.
“Next comes documents which confirm what you’re saying,” he says.
Confirming your identification
“To confirm your identity, you need to provide 100 points of ID, such as a driver licence and passport/birth certificate for each applicant,” Tindall says.
Proof of income
For PAYG employees, recent payslips must be provided to confirm income, Tindall says.
“If you’re self-employed, the lender will want to know there’s plenty of profit in the business to sustain you, so be prepared to provide two years’ worth of personal and company tax returns years, plus balance sheets and profit and loss statements,” he says.
“If you have rental income or thinking of buying a rental, you’ll need the last rental statement from an existing property or a rental appraisal from a real estate agent. If you get Centrelink payments, such as Family Tax Benefit, recent Centrelink statements will also be required.”
The property details
“Next, you need to confirm details about the property,” Tindall says.
“If buying a property, the front page of the contract of sale, with price filled out, signed by at least one party, will be needed.”
Your credit history
“Lenders will scrutinise your credit history and if you, or your broker, if you’re using one, know what they’ll see, you can anticipate some issues,” Tindall says.
“Old mobile phone bills or too many enquiries can impact your application, so getting hold of a copy is important. Google “free credit history” for your copy and you might be surprised!” he adds.
“To confirm your savings and debt history, lenders want to see the conduct of your existing facilities, such as credit cards and other loans. You’ll need the latest statements and often a transaction statement to bring it up to date,” Tindall says.
This information is of a general nature and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances.
Insurance
“To confirm the property is protected, you need an insurance policy against disaster,” Tindall says.
“The loan is using the value of the combined land and building to lend against. You’ll need adequate insurance in case the building bit is damaged by things such as flood or fire.”
Once all the paperwork is done, it’s time to wait for settlement and the keys.
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Realestate.com.au
