You are excited to refinance or buy your own home. Finally, you can nail paintings without fear. It is within walking distance from your best mate. It is even got your lucky number on the letterbox.
So why is applying for a home loan so daunting?
A lot is involved in getting it right, and there are no guarantees. Our finance broking specialists can help you with your home loan application checklist to get organised – and the more prepared you are, the more likely it is you will get a thumbs-up from your preferred lender. It is a daunting process because there are more than 25 lenders in australia that offer home loan products with competitive rates with product features. If you try to deal with the banks directly, it will create a footpath of multiple credit enquiries in your credit file. Also, it will be very time consuming and lost of comparisons to choose the most suitable home loan product for your financial objectives.
1. Make sure you have got your paperwork.
That means:
- At least three recent consecutive payslips;
- A recent copy of your latest PAYG Summary & Notice of Assessment from the ATO;
- Recent three months bank statements showing other income, like Centrelink payments;
- Your accountant’s details, if you are self-employed; and most 2 recent tax returns, and
- Evidence you have saved for your deposit (usually three months of savings) if you are purchasing.
2. Prove that it is you.
Oh yes, more paperwork. You will need at least 100 points of ID when you apply. A passport is a good start, plus a combination of your driver’s licence, bank cards, Medicare card or birth certificate. ASA Mortgage Brokers use digital platforms to verify your IDs’ and all you required is a smart phone if the ID verification is conducted remotely.
3. Figure out your financial position.
A lender wants to know that you can afford to make your repayments. Being eligible for a home loan is not just about how much you earn – lenders will also take into account other assets and how much you spend. If you are looking to refinance, it is a good time to consolidate your other liabilities to streamline your multiple repayments into a single repayment with savings. If you are a first home buyer, then it is difficult to debt consolidate other liabilities and it is required to declare as ongoing commitments on top of the home loan that you are applying for.
Gather your paperwork (are you sensing a theme?) for:
- Any other loans or debts you have, like car finance or personal loans;
- Assets in your name; and
- An estimate of your living expenses, including how much you are spending on those good corn chips.
4. Check out your credit report.
Most lenders want to see a clean credit report before they will approve your finance. You can order your Credit File report from a credit agency at a cost, so you are aware of your position before you apply for a home loan. Most of the time when you approached a finance broker, he/she will be able to obtain a copy of your credit file from a relevant credit agency as part of your financial assessment. However, if you apply directly with a bank, it will create a credit enquiry even though your home loan did not approve. When a mortgage broker obtains your credit report with your consent, it does not leave any footprint of credit enquiries in your credit file. It is highly recommended to disclose all of your liabilities and credit impairments to the finance broker before applying to minimise delays when the bank is assessing your application. If you are a credit impaired applicant(s), do not panic, because ASA Mortgage Brokers can find you a suitable lender to fit your circumstances to apply for the home loan that your desire.
5. Clean up your wallet.
When it comes to credit cards, lenders will ask you to state the total limit on each card that is the amount of credit available to you to use. Even if you do not owe anything, your lender will probably still consider the total limit to be a liability. You can boost your application by paying off and cancelling unused cards before you apply. If you must need to keep a credit card, then your mortgage broker can advise you what sort of credit limit you must maintain to get the approval of the home loan you need. If you are consider refinancing, it is worthwhile of an exercise to see how much you will be saving when debt consolidating with a refinance.
6. Know what you want to apply for.
ASA Mortgage Brokers will present you with a minimum of three lenders and its products to choose from with a recommended product to suit your needs. You will be asked to nominate the home loan and loan term you want. Before you do that, it is highly recommended to review the products and the product suitability. A finance broker can help you understand the different features, rates and fees, so you can get the right product first go. It is our obligation to look after our clients’ best interests when applying for a home loan and deliver a home loan product that meets your financial objectives. ASA Mortgage Brokers will provide you the Statement of Credit Assistance (SOCA) which is a comprehensive document explaining your new financial obligations and your financial position that presented to you with authority to proceed with the loan application.
7. Brag about your new home.
This is the exciting part. The loan application form will ask about the security for your loan – that is your new home. It will all start to feel real now. Supply details in writing, including the signed contract of sale. If you are building, you will need any council permits and your fixed-price builder’s contract. Our financial broker specialist will guide you through the process from initial meeting to the settlement.
8. Has your legal eagle lined up?
As you reach the end of your application, you will be asked to provide details of your solicitor or conveyancer. Having your legal professional lined up before you are ready to apply for a loan will speed up the paperwork. If you are not prepared or do not know where to get legal advice, ASA Mortgage Brokers can refer you to our trusted partners if needed. If you are refinancing your home loan dollar to dollar or with debt consolidation, then you would not need to get engaged with a conveyance.
9. Pay attention to detail.
There are a lot of requirements for a home loan. Giving yourself the best chance of success means getting it all spot on. Every detail on your loan application form should match up and cross-reference precisely. Make a checklist for your checklist, if you have to. Consider colour-coding it. Give yourself a gold star sticker for each one you cross off. It is highly recommended to consult your professional to seek answers if you are not sure or in doubt before signing contracts. It is also highly recommended to include “subject to finance” if your finance has not been formally approved when signing purchase contracts. If you are a temporary visa holder and looking to purchase a property in Australia, it is highly recommended to do your due diligence before signing any contracts. If you need assistance, contact us to discuss your circumstances.
10. Or … choose a simpler option.
Want to skip to the end? Contact the local finance broker like ASA Mortgage Brokers and we will fill out the application for you and tick the boxes of every step of the process. Too easy.
Applying for a home loan does not have to be difficult. Buy a fancy ring-binder folder, make copies of everything you submit, and take it one step at a time. ASA Mortgage Brokers use digital platforms in the process which means less paperwork but you will have all the documents sent to you as a digital copy to keep for your records. You will be in your new home before you know it.
To discuss your home loan needs, contact ASA Mortgage Brokers today to book your FREE consultation appointment.
The information is a compilation from various sources for your benefit and should not be relied upon instead of appropriate professional advice. This article is prepared based on general information. It does not consider individual financial objectives or needs and is not financial product advice, and the content quoted from ME Bank Blog.