Whether you are applying for your first or fourth loan, the process can seem overwhelming. But it doesn’t have to be.
By familiarising yourself with some of the common home loan requirements and terms, you will immediately feel more confident when applying for your next loan. The loan application process has changed significantly over the past 12 – 18 months so if it’s been a while since you last went through the process, be prepared for it to now include additional steps.
ID check
Firstly, you will need photographic proof of identity – a driver’s licence, passport or proof of age card will suffice. You will also need secondary documentation, such as a Medicare card, rates notice or utility bills that are no more than three months old.
Most lenders will be looking for as much information as possible, so it’s a good idea to provide as many of these documents as you have available. It would also be good to have your IDs certified as some lenders may require this. Many lenders also require you to do either in person or over video conference ID checks with your Mortgage Broker, so be prepared for this to be part of the process.
Income suitability
When determining your borrowing capacity, lenders will request documents outlining your financial situation. This will include payslips, bank statements and any other documents that relate to your income. Be prepared for both Fornaro and the lender to ask you lots of questions around your income, this is a critical part of the lender application process now.
Assets and liabilities
Be prepared to declare everything you own and any outstanding debt you have at the time of application.
This information will go a long way to determining your borrowing capacity, as well as providing lenders with peace of mind, should you find yourself unable to repay the loan.
Remember to provide bank statements, any savings accounts and term deposits, as well as details on any current liabilities or financial obligations – these might include Higher Education Contribution Scheme (HECS) statements, credit card statements and other repayment records.
Establishing your expenses
Your ability to meet monthly loan repayments is paramount for lenders, so be prepared to outline all your current expenses, in detail.
Instead of plucking numbers from the air, make a list of your monthly outgoings, Fornaro has a tool to assist you to do this easily. Your list should include everything from rent/mortgage repayments, utility bills and travel expenses to gym memberships, leisure activities, shopping, dining etc.
This will assist your lender evaluate your loan application, it will also give you a good indication of what you can realistically afford and/or how you can adjust your current lifestyle to achieve your goals sooner, we all spend more than we think!
While you may encounter some delays along the way, coming prepared when applying for a loan and working closely with Fornaro will make the whole process run a lot smoother.
If you are unsure of what is required, please contact Fornaro for more information.
This article is for general information only.
