7 things you need to get a home loan
Applying for a home loan:
7 things you need to get a home loan
Before you get a home loan there are certain things you’ll still need. We explore what they are and what difference they’ll make to your loan application.
1. Income
A lender will want to know that you have the capacity to repay any loan they give you.
If you’re an employee they’ll usually ask you to prove this by providing payslips, bank statements showing your salary being deposited, or a letter from your employer.
If you’re self-employed they’ll ask for your accountant’s details and your last two years of financial statements, as well as your personal tax return and company tax return, if you have one.
If you receive money from other sources – such as rental properties, shares or government payments – you’ll also need to provide evidence of this.
2. Evidence of what you own
A lender will always want to see evidence of the assets you hold. This may include your superannuation balance, bank account details and a list of any shares, property or other assets you own.
Some lenders will also want to see that you have a history of saving money. That’s because they believe having the discipline to acquire “genuine savings” means you’re more likely to have the financial discipline needed to meet your ongoing repayments.
Each lender will have its own definition for what qualifies as genuine savings and how long you need to have held onto the money for before applying for a loan. If you use a mortgage broker, they’ll be able to guide you through this process, letting you know exactly what you need to provide.
3. A sound credit history
All lenders will always look at your credit history before they provide you with finance. This usually comes down to getting details of your credit score.
Your credit score is a mark out of 1,000 and is based on your history of paying loans and bills, as well as how often you’ve applied for credit. This includes taking into account all of your credit cards, even if you don’t owe money on them, as well as details of any other debts you have. If you have ever been declared bankrupt or have any judgments against you, this can have a serious impact on your credit score.
4. Your expenses outside of the home loan
A lender will also take into account your living costs. This includes providing details of what you spend on groceries, eating out and other day-to-day expenses, as well as ongoing costs such as utilities, childcare or education, insurance premiums and more. They will also factor in any money that you need to keep paying on accommodation after you buy the property, such as rent or another mortgage. The easiest way to present this information to a lender is in the form of a monthly budget.
5. Details of any gifts, grants or exemptions
If a family member or friend is helping you buy the home, be prepared to provide the lender with evidence of this. This may be by providing evidence of the money in your bank account or handing over a signed letter showing evidence of the loan or gift. You should also have details of any grants or exemptions you’re eligible for, such as any First Home Owners Grants or Exemptions that apply in your State or Territory.
6. Details of the property you’re purchasing
Before you’re given your home loan, your lender will usually ask for a copy of the front page of the signed contract for sale. If you’re building they may also want to see a fixed price builder’s contract and approved construction plans. Often, a lender will organise a valuation of the property you’re purchasing, particularly if you don’t have a large deposit.
7. Identification
Finally, a lender will always need formal identification, such as a passport, driver’s licence or other photo ID. If you don’t have these, you may be able to provide an original birth certificate, Medicare card or some other forms of identification.
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Original source: Realestate.com.au
https://www.realestate.com.au/home-loans/8-things-you-need-to-get-a-home-loan