What documents do I need for a home loan?

What documents are needed to apply for a home loan?

It can be complicated for home loan applications, while we believe with Reservoir Finance, we are making the application easier, clearer, and making sense to you. In a nutshell, the lenders will focus on the following six sections to decide whether they want to lend and how much they want to lend. For all of our clients, we will send you a customised checklist before applying the home loans to make sure the process is easy, clear, and makes sense.

Identity - Who are you?

Identity is not only about 100 points verification. It also includes your personal information including your marriage status, past 3 years’ living address and past 3 years’ employment history. Normally, doing a Credit Check is helpful to get a general picture for yourself and make sure everything in the credit report is correct.

Income – how much do you earn?

For salary earning borrowers, documentation is relatively easy. Latest payslips are always required, and in some cases, three months bank statements, employment letter, last financial year’s PAYG payment summary may be required. For self-employed borrowers, Individual Tax Return and Notice of Assessment are always required for the last 2 financial years, and company financials and company Tax Return are also needed for income verification.* For investment property holders, a rental statement from a real estate agent is required, while alternative documents including tenancy agreement and bank statements can also be accepted for private lease. All other sources of income, including dividend, Centrelink income, or non-taxable incomes, are in general accepted if they can be verified as genuine and continual.

*There are alternative methods for self-employed borrowers to verify your incomes without providing full financials – that’s what we call Low Doc or Mid Doc. In most cases, we may need only one of the following three: 6 months business bank statements, 2 recent BAS, or Accountant Letter. Interest rate starts from mid 3%. For more information, contact Reservoir Finance at [email protected] for professional advice.

Liability – how much do you owe?

Lenders need to verify all active liabilities, including home loans, car loans, personal loans, and HELP/HECS. A recent statement showing loan limit, loan balance, expiry date, interest rate, and repayment is normally required.

Expense – how much do you spend?

As part of the Hayne Royal Commission, lenders are now scrutinising borrowers’ living expenses to a point that both borrowers and mortgage brokers may sometimes feel common sense does not exist anymore. However, in order to successfully apply for a home loan, a detailed review and discussion for applicants’ living expenses is crucial. A three-month bank statement is generally required for verification.

Security – what will the lender hold?

As the ultimate valuable item for the lenders, security value is normally verified by a valuation. Different types of valuation may be ordered by lenders based on different situations. Other supporting documents including Contract of Sales or Council Rate may be required for valuation purpose.

Asset – what does your personal balance sheet look like?

A declaration for all valuable assets a borrower has is important to reflect a true balance sheet and a healthy personal balance sheet will be welcomed by the lenders.

Want us to help you apply for a home loan?

Applying directly with a bank can be challenging as they each require different types of documents and can be quite annoying to deal with. If you apply for a loan through a broker, we can help guide you through this process and be very specific about what documents are needed so that the bank will approve (or pre-approve) your loan faster! Speak with us today using the form below or call us on (02) 8288 9123!

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