Intending to apply for a home loan? You probably already know that you’ll need to settle on a budget and decide what type of loan you’re looking for. But do you know what’s really involved to get your home loan approved?
Lenders have a detailed process they need to go through, and they’ll need to see a lot of documentation from you. To give yourself the best chance of success, you need three things: paperwork, patience and preparation.
Let’s start with the nuts and bolts. If you have all your documentation ready to go before you start the application, it will run a lot more smoothly. This is an area where using a mortgage broker can really help, as they’ll know ahead of time what the bank expects to see and can help you get organised.
Lenders must verify your identity as part of the loan application. They’ll need to see primary identification, such as:
If you don’t have sufficient primary ID, you might be able to provide other forms, like:
If your savings are where they should be and you’re preparing to apply for your home loan, it might be time to talk to a mortgage broker. When it comes to the details and documentation, they can help you stay ahead and on top of the process. Featured here: Sacramento, Minta Estate, Berwick.
Proving your income is critical to the success of your application./p>
For salaried employees, this is fairly straightforward. You’ll need:
For self-employed people, expect to provide:
You’ll also need documentation for any other form of income you receive, for example:
Lenders do vary in their requirements, so if you don’t have comprehensive records you may still be able to get a loan. Some banks will assess a self employed person based on the last 12 months instead of averaging across the past 24, which is helpful for new business owners or people who have had very strong growth in the last year. There are also ‘low doc’ loans available if you have even fewer documents to provide. These are higher interest loans, though, so if you do have the option to go with a traditional loan, you’ll save money.
What comes in must go out. Your lender will want to see that your outgoings are less than your income. To that end, be prepared to provide the last six months’ worth of bank statements for all your accounts, including transaction, savings and credit card accounts.
If you’ve paid out more than usual, perhaps for orthodontics, a once-in-a-lifetime holiday or a home renovation, it’s a good idea to attach a brief explanation confirming why the expense was necessary and that it is now at an end (or has a set end date).
Assets and liabilities
Your capacity to repay the loan is also affected by any other debts or assets you have.
The bank will ask for:
If you’re applying for a home loan it might require some patience. The timeline for loan approval varies significantly depending on the market and the time of year. As a rule, try to allow 4-6 weeks as a minimum. Featured here: Sheraton Grand Deluxe, Jubilee Estate, Wyndham Vale.
The timeline for loan approval varies significantly. When the market is strong, lenders are dealing with a higher volume of loans and timelines can be extended. It is also often slower over the Christmas holidays, with people on leave.
In general, allow 4-6 weeks as a minimum. Here’s what the bank has to do in that time:
Getting pre-approval for your loan makes everything easier.
For a pre-approval application, you’ll provide all the same documents as above. The bank will then offer a conditional approval that sets out:
If you have a pre-approval in hand, you can budget with confidence. The bank already has all the documents in hand and can go straight to the valuation, so you can get your home loan approved faster and with far less stress.
Fastrack the process and start building your dream home! Getting pre-approval for your loan gives you a better idea of your budget and makes the process far less stressful. Learn more about the benefits of pre-approved home loans here.
For more information and advice, visit our Loan Studio page. Ready to get your home loan rolling? Speak to one of our friendly staff on 1300 978 051.