Applying for a loan application is one of the most exciting things you may do in your life. Doing everything that is required for the application gets you that little bit closer to finally owning your dream home. However, we understand better than most that this process can also be a little bit tricky. This is why we want to let you know about the key things that you will need when you are proceeding with a loan application.
What You Need to Remember for When You Are Going Forward with a Loan Application
There are many important parts to the process of applying for a home loan that you will need to complete. For many, the road to obtaining a home loan is long and full of sacrifice. The last thing that you want is to run into any home loan roadblocks because you did not complete the application process properly. Ensuring that you have the correct information for the topics below may help you to avoid this unpleasant occurrence happening to you.
Proof Of Identification
Lenders will want proof of your identification to ensure that you are who you say you are and that this application is not being made under any criminal or nefarious pretences. Lenders will require 100 points of identification. To achieve the 100 points, you will need to provide two of the following current documents:
- Drivers licence (or Learners or Proof of Age Card), AND
- Passport, OR
- Birth Certificate
The lender may also request a copy of the following:
- Medicare card
- Proof of residency or Australian Citizenship
Proof of Income
Depending on your type of employment will depend on the documentation you need to provide to prove your income. PAYG PAYG refers to you working for someone else and receiving a payslip. If you are paid as a PAYG employee you will more than likely be employed in the following capacity:
- Permanent part-time
- Permanent full-time
The type of proof you’ll need to provide will be:
- 2 x current consecutive payslips
- 3 months of current bank statements showing your salary credits
- Income Statement from the last financial year
Other potential documents that you may have to provide:
- Employment contract or letter
- Interim Income Statement
Self-Employed (or Contractor) If you are self-employed, which can include Contractors who invoice the person or company they are working for, you will need to provide two years of financials (please note there are exceptions to this rule of which Cherry Lending & Finance can explain). The different types of financials you will need to provide will depend on your business structure. Types of business structures:
- Sole Trader
The types of documentation required will be as follows:
- Personal tax returns
- Personal Notice of Assessments (NOA)
- Business financials; i.e. profit & loss statement and balance sheet
- Business tax returns (for all entities)
- Diagram of cash flow if it is a more complex business structure
Please note that for most lenders your Australian Business Number (ABN) will need to have been registered for a minimum of two years. There are exceptions to this, but in general this rule applies.
It’s important for a lender to assess your full financial position to make sure you are not a credit risk and to ensure you can service the loan amount you are requesting to borrow. You will therefore need to list ALL current liabilities which include but are not limited to the following. Note: it is important that your existing liabilities are up to date and you have not missed a payment or defaulted because this could impact your ability to get a loan.
- Home loan/s
- Credit card/s
- Car loan/s
- Personal loan/s
- Buy Now Pay Later APPS such as Afterpay, ZipMoney, Humm, Latitude Pay, PayPal and all other facilities such as these
It is important to note that even if you are not using these facilities they still need to be listed as you could technically use the credit limit at any point. If you do not disclose your current liabilities it could impact your loan application assessment.
As well as your existing liabilities, the lender will want a summary of all existing assets. Assets include but are not limited to the following.
- Your home (if you own it)
- Investment property/s
- Cash in bank
- Superannuation balance
- Home contents
- Motor vehicles
- Other investments such as shares
To proceed with your home loan, you must have all of the information ready and accessible for the lenders when they ask for it. Doing this will help your chances of getting the loan approved.
Your Guide For Navigating The World Of Home Loans
With a background in banking, finance, business development and project management, there’s no better advocate to have on your team than Nikki Berzin. As a fully qualified mortgage broker and director of Cherry Lending & Finance, Nikki is passionate about all things finance, and empowering her clients with the tools to hit their property goals is what she does best. If you’re looking to get into your first home, purchase an investment property or even want to look at your options for refinancing, the first step is starting the conversation. Get in touch with Nikki today or call her directly on 0427 374 155 to bring your mortgage dreams to life. Disclaimer: We recommend that you seek independent financial and taxation advice before acting on any information in this newsletter. It contains general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. Interest rates are subject to change without notice. Lenders terms, conditions, fees & charges apply. Credit Representative 499652 is authorised under Australian Credit License 389328.