Putting together the paperwork needed for home loan approval is a task many prospective home buyers dread. There is no denying that applying for a home loan is a complex process and the required documentation that lenders require can be significant. So it can be reassuring when your mortgage broker explains the process in simple terms and advises you that they know what lenders are looking for when it comes to assessing an application.
Submitting an incomplete loan application directly to lender can result in the loan application going back and forth without result or even derail the application altogether.
Lenders assess your application by evaluating the risk involved with repaying the loan. While requirements vary from lender to lender, here is some of the key criteria commonly used to assess the risk of a client. This checklist is only a guide. Your mortgage specialist will advise you if your personal circumstances mean that other documents are required.
Lenders want to know how much you earn as well as how stable these earnings are. They are interested in whether your employment is continuous and consistent. Bank statements, payslips, group certificates or tax returns are among the documents required to give evidence of income.
To determine your financial situation, lenders want to see proof of your assets and liabilities, including savings, shareholdings and motor vehicles. Lenders often differ in their requirements, but as your mortgage broker, we can advise you of the specific paperwork required. Some lenders, for example, ask for documentation relating to insurances and personal cover to see whether your assets are protected. The following list provides a summary of what you will need to provide:-
If you are refinancing a loan, lenders will also request copies of credit card and personal loan statements to see that you’ve been able to make any previous credit repayments and bill payments on time. Keep in mind that it’s not just your credit card, home loan or personal loan repayments they’ll look at, but also any mobile phone and utility bills.
It’s not just the dollar figure that lenders look at, but also whether you are capable of saving over the long term. A bank account statement showing regular deposits is an example of documentation required. Applications can be rejected if a savings history is deemed not to be genuine, for example savings which were a gift.