Home Loan Checklist

The following steps will help you expedite your home loan approval process.

1.    Check your credit rating. 

You can obtain your credit report from credit reporting agencies such as Equifax, which will generate a your credit rating based on your previous credit history.

Applicants with a good credit rating are more likely to be approved. If you have a poor credit rating you are likely to have your hone loan application declined or have stricter conditions imposed on your loan should you be approved.

​

2.    Do your research on the different type of loan products available

Take the time to research the different types of home loan products that are available for you so that you can see which product best suits your needs and financial situation.

There are a number of different home loan products that you can choose from:

 

• Variable rate home loans

• Fixed rate home loans

• Interest only home loans

• Second mortgages

• Construction loans

• Debt consolidation loans

Each of these products has both pro’s and cons, they also have a range of features such as an offset account or redraw facility so take your time to see which home loan product is most suitable for your personal circumstances.

3.    Work out your deposit or contribution

The amount that a borrower uses as a deposit can play a significant role in achieving not only an approval, but a cost effective deal.

When you are aware of your deposit amount you know how much you need to borrow, what your repayments might be, and if you can afford those repayments.

The size of your deposit will also dictate whether you will incur any additional expenses such as lenders mortgage insurance which is generally paid on any loans with a great loan to value ratio (LVR) greater than 80%.

4.    Prepare your monthly income and expenses scenario

As part of your loan application, lenders will require a monthly income and expenses budget. This is to identify if you have enough income to meet all of your regular financial obligations.

This budget will demonstrate if you have the capacity to service the loan and forms a part of the home loan assessment process.

Your capacity to meet regular repayments or otherwise service the loan depends on a number of factors:

​

• The amount of the loan and associated costs.

• The amount of the repayments

• Your income to support these repayments and

• Your other regular expenses.

Home loan serviceability is considered in terms of a debt service ratio. Loan repayments are expressed as a percentage of their monthly income. As a rule of thumb, most lenders will not approve a repayment that is in excess of 33% of your income.

5.    You will need your proof of income documents

To confirm that a borrower can service the home loan repayments, lenders will need verify your employment documents and proof of income. The documents that a lender may reply upon to prove your income and ability to service the loan include:

 

• Pay slips

• Bank statements.

• Tax returns.

• Employer contact details and,

• Confirming stable employment history.

If you are self employed you may also require:

 

• business tax returns for the last 2 years.

• financial statements.

• accountants letter.

 

6.    Put together your asset and liabilities documents

If you have any assets you may need to prove this to the lender. This may include rates notices for any properties you own, car registration, shares as well as other assets of value.

Home loan providers will also need to provide information on any other debts such as other mortgages, credit cards, car loans and personal loans.

7.    Make sure you have 100 points of identification

If you have a drivers licence, passport, Medicare card, rates notice or utilities bill it you will need some of these documents to confirm your identity to the home loan provider.