So what do lenders require for a home loan? As you may already know, a home loan application process involves endless paperwork.
However, you can simplify this daunting job by arranging your documents beforehand. Typically, lenders check your repayment ability and monthly living expenses to ensure responsible lending.
So, they may want you to produce adequate evidence with the proper documentation. Read on and learn everything involved.
Documents required to get a home loan
You need to keep the following documents handy when applying for a home loan.
Proof of identity
According to the current legislation, your lenders need to verify that you are the same person that you claim to be. Therefore, you will have to produce at least one primary and two secondary documents that support your identity. Some standard documents that you can consider include the following.
Primary documents: Foreign/Australian passport, driver’s licence (Australian), learner permit ( Australian)
Secondary documents: Medicare card, birth certificate, citizenship certificate, ATO assessment notice (less than a year old)
If you already bank with your lender, you don’t need to submit your proof of identity again, but if you are applying with a new lending partner, you will have to keep the mentioned documents handy.
Proof of income
When reviewing your home loan application, your lender may ask you to provide income proof. This will help them verify how much you earn and how much you can repay every month. Usually, your lender will accept any of the following documents as proof of income:
Salaried: If you are receiving salary or wage, you can submit your bank statements with three months’ salary credit history, payslips, employment contract or letter that shows your salary and employment. You can also produce updated tax returns and ATO Notice of Assessment.
Self-employed: As a self-employed individual, you can submit your updated tax returns, ATO Notice of Assessment, and your home loan application.
Government income: If you are entitled to benefits or government income, you can provide bank account statements with payment credits. Besides, you can submit a letter from Centrelink containing the payment outline.
Documents to support your financial situation
When reviewing your application, your lender may want to check your financial situation. This way, they verify your living expenses and current debt-to-income ratio. From these parameters, they can obtain an idea about your repayment abilities.
Special cases like student home loans may require more information but, typically, your lender will check the following details when processing a home loan application.
Assets: Superannuation, rental income, shares or investment income, vehicles etc., are considered assets. Your lender may ask you for the details of the assets you own when applying for a home loan.
Liabilities: Personal loans, credit card limits, car loans etc., are considered liabilities. Most lenders determine your eligibility to cover mortgage repayments from your assets and liabilities.
Monthly living expenses: Typically, your monthly living expenses include gas, electricity and water bills, groceries, transport, insurance premiums, childcare and education, personal care, recreation, internet and phone bills etc.
Common questions around what lenders require for a home loan
Do lenders check your credit score when reviewing a home loan application?
Yes, they do. Your potential lender typically learns about your repayment abilities and trustworthiness by checking your credit history.
Can a mortgage broker help you get a home loan?
Generally, a mortgage broker works as an intermediary between a real estate seller and a buyer. Besides, they can help you find lenders with the best rates and terms. You might want to consider connecting with a qualified mortgage broker like Soho Home Loans if you want to save money on home loans.
What do lenders check when applying for a home loan?
Besides your credit score and income proof, your lender may ask you about your monthly expenses. In addition, they may ask you about your assets like investment property, shares, vehicles etc. This way, they will figure out your current financial situation and take a call accordingly.
Conclusion
Home loan providers usually check several documents to determine your eligibility to qualify for a home loan. They may include your identity and income proof, utility bills etc. Check with your lender and keep them ready to avoid inconveniences.
