Quite often half the battle in getting your loan approved can be in the quality of the verifying documents supplied to the bank with the loan application.

It is a little frustrating that the bank asks for so much information when you submit your home loan application. In fact it nearly questions your integrity. However the banks work on the old rule that you can trust no one, so we, the consumers pay the price for those few who try to cheat the system. A few years ago the Code of Banking Practice and the Consumer Credit Code were set up to protect you the borrower. Whilst this does protect the borrower it has also increased the paperwork required in meeting the bank’s requirements. In this issue of Powerline we will explain what documents are required with your home loan application and why.

Identification

Just like when you open a new bank account we need to provide 100 points of identification when we open a new home loan. The only time this is waived is if you are getting the home loan from the bank where you already have an account. The easiest way to obtain 100 points is a driver’s license and Medicare card or passport. If you can’t supply these give us a call and we can offer some alternatives.

Income

If you work for wages we need at least two of the following – your three most recent pay slips, last group certificate (payment summary), a letter from your employer, last tax return and assessment notice. If you are self employed we need your last two years’ tax returns, financial statements and tax office assessment notices.

If you receive social security benefits we need a letter from Centrelink no more than one month old stating your current benefits.

Income from rental properties – A current lease agreement, last three months’ rental statements.

In the event of an audit, the bank and your broker must be able to show how you are going to repay the loan and that this loan is not over-committing you.

Other

1. Verification of your deposit - this is probably the most important. To do this we need the last six months’ statements on the account that you used to save your deposit. If your deposit is equity in another property we need proof of ownership (rates notice) and a current loan statement. If it is from the sale of a property we need the contract of sale and the final loan statement. This shows the bank your ability to save and/or make ongoing loan repayments.
2. Proof of other investments - share and investment certificates are best here. This helps to determine your asset base.
3. Existing loans and credit cards - we need the loan contract and the last three credit card statements. This shows the bank what other monthly commitments you have.
4. Your last superannuation statement for proof of assets.
5. Your current life and accident insurance policy to make sure the loan is covered in the event of an unforeseen incident.
6. Rates notices to confirm ownership of any properties owned outright.
7. Statements on any other savings accounts you may have.
8. Contracts for the property you intend to purchase. If you are building we need the builder’s contract, full specifications and plans.

All of the above seems very tedious and unnecessary however getting it right first time can mean getting your loan approved first time which is a good outcome for a little extra work.

It should also be noted that the requirements are different for equipment finance and business loans. It is similar for personal loans.

If you are not sure on any of the above requirements please don’t hesitate to call us.

Remember we are available to help at any time with all your finance requirements.

Finally we would like to remind people that our service to you on home and business loans is generally free of charge. We are paid by the lender. If for some reason a fee does need to be incurred we get your approval to do this beforehand.

© Power Tynan Pty Ltd